If Year 1 Is the Base Year, the Price Index

question 29

Essay

If Year 1 is the base year, the price index for Year 2 is 105, and the price index for Year 3 is
103. What is the inflation rate in Years 2 and 3? Explain what has happened to the cost of living between Years 1 and 2 and Years 2 and 3.

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Definitions:

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