Question

Which of the following changes in the price index produces the greatest rate of inflation: 106 to 112, 112 to 118, or 118 to 124?
a. 106 to 112
b. 112 to 120
c. 118 to 126
d. All of these changes produce the same rate of inflation.

Answer 1

Answer:

A

Step-by-step explanation:

firstly you have to find the rate of change of the various price index in percentage.

A, From 106 to 112:

we find the difference 112-106 = 6

then the rate of change = 6/106 * 100 = 5.66%.

B ,From 112 to 118:

we find the difference 118-112 = 6

then the rate of change = 6/118 * 100 = 5.36%.

C ,From 118 to 124:

we find the difference 124-118 = 6

then the rate of change = 6/124 * 100 = 5.08%.

we can see that the price index with the greatest percentage is A.