In 1989, the CPI was 124.0 in 1990, it was 130.7 What was the rate of inflation over this period ?
Correct answer: A. 5.4 percent
- A. 5.4 percent
- B. 30.7 percent
- C. You can't tell without knowing the base year
- D. 5.1 percent
Explanation
Inflation is calculated as the change in CPI divided by the earlier CPI: (130.7 − 124.0) ÷ 124.0 × 100, which is about 5.4%. The base year is unnecessary because both CPI values are given.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
Practise Macroeconomics
1,499 free Macroeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Macroeconomics questions
The "basket" on which the CPI is based is composed of ?
If the nominal interest rate is 7 percent and the inflation rate is 3 percent, then the real interest rate is ?
Under which of the following conditions would you prefer to be the lender ?
An increase in aggregate demand is more likely to lead to demand pull inflation if ?
If workers and firms agree on an increase in wages based on their expectations of inflation and inflation turns out to be more than they expected ?
Under Which of the following conditions would you prefer to be the borrower ?