Question

If the CPI rises to 150 from 120, then prices have
A) risen 20 percent.
B) risen 25 percent.
C) risen 30 percent.
D) fallen 20 percent.

Answer 1

Answer:

B) risen 25 percent.

Explanation:

The inflation rate is the rate at which overall prices are increasing in the economy in a period. It is expressed as a CPI value.

Given CPI for different periods, inflation can be calculated using the formula below.

Inflation = new CPI - old CPI   x 100

  old CPI

In the case

The inflation rate will be 150- 120   x 100

        120

=30/120 x 100

=25%