Question

In the Republic of Sildavia, a market basket of goods and services cost $130 in 2009, $140 in 2010, and $160 in 2011. Based on this information and considering 2009 as the base year, inflation from 2009 to 2011 was: 7.69%. 7.14%. 23.07%. 14.28%.

Answer 1

Answer:

23.07%

Explanation:

For computing the inflation rate first we have to determine the price index for 2011 which is shown below:

Price index for 2011 is

= (market basket of goods and services cost in year 2011) ÷ (market basket of goods and services cost in year 2009) × 100

= ($160) ÷ ($130) × 100

= 123.07%

Now the inflation rate is

= (Price index for 2011 - price index for 2009) ÷ (price index for 2009) × 100

= (123.07 - 100) ÷ (100) × 100

= 23.07%

And, the price index for 2009 is

= ($130) ÷ ($130) × 100

= 100%