Question

Suppose the cpi was 110 last year and is 121 this year. instructions: in part a, enter your answer as a whole number. in part b, round your answer to 1 decimal place. if you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers.
a. what is this year’s rate of inflation?

Answer 1

To calculate the change in CPI we need to do a % change formula. (New - Old) / (Old) = n. (121 - 110) / 110 = .10. This is equal to a 10% change in CPI. To confirm the answer, do, (Old) * (1+n) = New CPI. 110*(1+.10) = 121. It equals so it is right!