Homework Answers
Price level in 2007 = 100
Price level in 2008 = 105
Price level in 2009 = 110
Price level in 2010 = 115
Inflation rate between 2007-08 = [(Price level in 2008 - Price level in 2007)/Price level in 2007] * 100 = [(105-100)/100] * 100 = 5%
Inflation rate between 2008-09 = [(Price level in 2009 - Price level in 2008)/Price level in 2008] * 100 = [(110-105)/105] * 100 = 4.76%
Inflation rate bwteen 2009-10 = [(Price level in 2010 - Price level in 2009)/Price level in 2009] * 100 = {(115-110)/110] * 100 = 4.55%
It can be observed that the inflation rate has remained positive and has continuously decreased in the given period.
Ans: e) both a and c are correct
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