Question

The price index was 120 in 2012 and 126 in 2013. what was the inflation rate?

Answer 1

That would be (126 - 120) / 120  = 5/120  = 5%

Its b

Answer 2

Answer:

b. 5.0 percent

Step-by-step explanation:

We have been given that the price index was 120 in 2012 and 126 in 2013. We are asked to find the inflation rate.

$\text{Inflation}=\frac{\text{Price Index in current year-Price Index in base year}}{\text{Price index in base year}}\times 100$

$\text{Inflation}=\frac{126-120}{120}\times 100$

$\text{Inflation}=\frac{6}{120}\times 100$

$\text{Inflation}=\frac{1}{20}\times 100$

$\text{Inflation}=5$

Therefore, the inflation rate was 5% and option 'b' is the correct choice.