Question

A consumer survey conducted in two consecutive years found that a fixed basket of goods and services cost $36.00 in year 1 and $36.75 in year 2.The rate of inflation from year 1 to year 2 is __%

Answer 1

Answer:

2.08%

Step-by-step explanation:

Inflation basically is the general increases in prices and the fall in purchase value of money.

To calculate the inflation rate given the two items' price, we need to find the % change that occured.

The formula we can use:

$I_r = \frac{N-O}{O}*100$

Where

$I_r$ is the inflation rate

N is new price [price at year 2]

O is the old price [price at year 1]

So N would be 36.75, O would be 36, now let's find the Inflation Rate:

$I_r = \frac{N-O}{O}*100\\I_r=\frac{36.75-36}{36}*100\\I_r=\frac{0.75}{36}*100\\I_r=2.08$

Thus, the inflation rate is 2.08%