If the Consumer Price Index Changes from 120 in the Year

question 82

Multiple Choice

If the Consumer Price Index changes from 120 in the year 2012 to 126 in the year 2014,the average rate of inflation per year over this two-year period is approximately

• A)6%.
• B)5%.
• C)3%.
• D)2.5%.
• E)1.5%.

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Definitions:

Annual Interest Rate

The percentage increase in money that occurs over a year, which includes interest on loans, deposits, or investments.

Investments

Assets or items acquired with the goal of generating income or appreciating in value over time.

Interest on Interest

The concept of earning interest on the reinvestment of previous interest payments, a compound interest phenomena.

Average Annual Interest Rate

The average amount of interest earned or paid on an investment or loan over a one-year period, expressed as a percentage.