Question

I have the following problems:
35) If the CPI this year is 240 and the CPI in the previous year was 200, what is the annual inflation rate?

A) 40.0 percent

B) 20.0 percent

C) 50 percent

D) 16.7 percent.

E) -16.7 percent

and

36) The inflation rate between last year and this year was 14 percent. The CPI was 118 this year. What was the CPI last year?

A) 104.0

B) 103.5

C) 104.5

D) 105.0

E) 103.0

Answer 1

Ans. 35) B)  20.0 percent

CPI this year = 240 and CPI previous year = 200, then

Annual inflation rate = CPI this year - CPI previous year/ CPI previous year x 100

= 240 - 200/ 200 x 100

= 20 percent

Hence, the annual inflation rate is 20 percent.

Ans. 36. B) 103.5

the inflation rate = 14 percent, CPI this year = 118, then

   the inflation rate = CPI this year - CPI last year/ CPI last year

14 percent = 118 - CPI last year/ CPI last year

14/100 = 118 - CPI last year / CPI last year

  0.14 x CPI last year = 118 - CPI last year

0.14 x CPI last year + CPI last year = 118

CPI last year ( 0.14 + 1 ) = 118

1.14 CPI last year = 118

CPI last year = 103.51

Hence, the CPI last year is 103.5.