If the Price Index Is P₁ in Year 1 and P₂

question 18

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)/P₁] x [100/2]
• B)[(P₁ - P₂)/P₂] x [100/2]
• C)[(P₁ - P₂)/P₂] x 100
• D)[(P₂ - P₁)/P₁] x 100
• E)(P₂ - P₁)x (100/2)

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