The Price Index Was 136 in One Year and 142

question 166

Multiple Choice

The price index was 136 in one year and 142 in the next year.What was the inflation rate between the two years?

• A)1.04 percent
• B)4.41 percent
• C)6.00 percent
• D)42.00 percent

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Definitions:

Highly Elastic

refers to the sensitivity of demand or supply to changes in price or other factors, where a small change can cause a significant change in the quantity demanded or supplied.

Highly Inelastic

Describes a situation where supply or demand for a product or service is relatively unresponsive to changes in price.

Unit Elasticity

A situation where a change in the price of a good or service results in a proportional change in the quantity demanded or supplied.

Income Elasticity

A measure of how much the demand for a product changes in response to a change in consumers' income.