If the CPI Was 125 Last Year and Is Now

question 101

Multiple Choice

If the CPI was 125 last year and is now 135, then the inflation rate last year was:

• A) 6%.
• B) 7%.
• C) 8%.
• D) 10%.

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Definitions:

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, affecting purchasing power and inflation.

Real GDP

The total value of all goods and services produced within a country in a specific period, adjusted for inflation, reflecting the actual productivity of an economy.

Aggregate Supply Curve

A graphical representation showing the total quantity of goods and services that producers in an economy are willing and able to supply at different price levels.

Price Level

Price level is the average of current prices across the entire spectrum of goods and services produced in the economy, used to measure inflation or deflation.