High School

The price index was 220 in one year and 238.2 in the next year. What was the inflation rate?

A. 8.3 percent
B. 108.3 percent
C. 4.8 percent
D. 38.2 percent
E. None of the above

Answer :

Final answer:

The inflation rate between two years with price indices 220 and 238.2 can be calculated using the given formula, resulting in a value approximately equal to 8.27%, which is closest to 8.3%

Explanation:

The inflation rate can be computed by subtracting the price index of the previous year from that of the current year, dividing the result by the price index of the previous year and then multiplying by 100 to convert it into percent.

So, the formula is as follows: [ (Current Price Index - Previous Price Index) / Previous Price Index ] x 100

In this case, the formula becomes: [(238.2 - 220) / 220] x 100

After calculation, this gives an inflation rate of approximately 8.27%. So, the closest answer is 8.3 percent (option a).

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