Question

4:03 X Extra Credit 2.docx Extra Credit 2 (Take Home) - 5 point:s Numerical Problem #7 (Chapter 2) For the consumer price index values shown, calculate the rate of inflation in each year from 1930 to 1933 Year 1929 1930 1931 1932 1933 CPI 51.3 50.0 45.6 40.9 388

Answer 1

The CPI measures the inflation in the economy , and the rate of inflation from one year to another year from 1930 is given below.

Rate of growth= present value- past value/ past value*100.

1). Inflation rate of change from 1930 to 1931

  $=45.6-50/50$

$=-4.4/50$

$=-0.088\times 100$

  $=-8.8$. %.

Inflation rate of change from 1931 to 1932.

$=40.9-45.6/45.6$

  $=-4.7/45.6$

  $=-0.103$

  $=-0.103\times 100$

  $=-10.30$ %.

Inflation rate from 1932 to 1933.

  $=38.8-40.9/40.9$

  $=-0.051\times 100$

$=-5.13$%.