Question

In contrast, suppose that the CPI was 110 last year and is 108 this year. What is this year’s inflation rate? In contrast, suppose that the CPI was 110 last year and is 108 this year. What is this year's rate of inflation? What term do economists use to describe this second outcome?

Answer 1

Answer and Explanation:

The computation is shown below:

The Rate of inflation is

= (CPI this year - CPI last year) ÷ (CPI last year) × 100

= (121 - 110) ÷ 110 × 100

= 10%

Now for other

The Rate of inflation is

= (CPI this year - CPI last year) ÷ (CPI last year) × 100

= (108 - 110) ÷ 110 × 100

= -1.81%

Here the term i.e. used for the negative rate of inflation is deflation

The same is to be considered