If the Price Index Is P₁ in Year 1 and P₂

question 36

Multiple Choice

If the price index is P₁ in year 1 and P₂ in year 3,the average inflation rate per year over this period is calculated as

• A)(P₂ - P₁)× (100/2).
• B)[(P₂ - P₁)/P₁] × 100.
• C)[(P₂ - P₁)/P₁] × [100/2].
• D)[(P₁ - P₂)/P₂] × 100.
• E)[(P₁ - P₂)/P₂] × [100/2].

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