If the Price Level Is 100 in One Year and Rises

question 59

Multiple Choice

If the price level is 100 in one year and rises to 102 the next year, then the inflation rate is

• A)2.0 percent.
• B)0.02 percent.
• C)100 percent.
• D)102 percent.
• E)unable to be determined without knowing potential GDP.

---

Definitions:

Wage Rate

The standard amount of compensation received by a worker per unit of time (hour, day, etc.) for their labor.

Labor Productivity

A measure of economic performance that calculates the amount of goods and services produced per unit of labor.

Nominal Wages

Refers to the actual money paid to workers, not adjusted for inflation.

Price Level

The general average of the prices of goods and services in an economy at a given time.