Question

) Calculate the CPI for each year. Show your work in the chart and circle the CPI for each year. b) Calculate the inflation rate for each year compared to the year prior. Show your work in the chart and circle the inflation rate for each year. c) Based on your completed chart, what is the percentage decrease or increase in 2022 prices compared to 2020

Answer 1

Answer:

CPI in 2019 = 80

CPI in 2020 = 100

CPI in 2021 =120

CPI in 2022 =180

Inflation rate in 2019 = -

Inflation rate in 2020 = 25%

Inflation rate in 2021 = 20%

Inflation rate in 2022 = 50%

There was a 25% increase in price from year 2020 to 2022

Explanation:

Please find attached an image of the table used in answering this question

The consumer price index measures the changes in price of a basket of good. It is used to measure inflation.  

CPI = (cost of basket of goods in current period / cost of basket of goods in base period) x 100

CPI in 2019 = 16/20 x 100 = 80

CPI in 2020 = 20 / 20 x 100 = 100

CPI in 2021 = 24 / 20 x 100 = 120

CPI in 2022 = 36 / 20 x 100 = 180

Inflation is a persistent rise in the general price levels

Inflation rate = (change in prices / previous years price) x 100

Inflation rate in 2020 = [(20 - 16) / 16] x 100 = 25%

Inflation rate in 2021 = [(24 - 20) / 20] x 100 = 20%

Inflation rate in 2022 = [(36 - 24) / 24] x 100 = 50%