Ask Question
27 August, 08:58

In the Republic of Sildavia, a market basket of goods and services cost $130 in 2009, $140 in 2010, and $160 in 2011. Based on this information and considering 2009 as the base year, inflation from 2009 to 2011 was: 7.69%. 7.14%. 23.07%. 14.28%.

+3
Answers (1)
  1. 27 August, 09:07
    0
    23.07%

    Explanation:

    For computing the inflation rate first we have to determine the price index for 2011 which is shown below:

    Price index for 2011 is

    = (market basket of goods and services cost in year 2011) : (market basket of goods and services cost in year 2009) * 100

    = ($160) : ($130) * 100

    = 123.07%

    Now the inflation rate is

    = (Price index for 2011 - price index for 2009) : (price index for 2009) * 100

    = (123.07 - 100) : (100) * 100

    = 23.07%

    And, the price index for 2009 is

    = ($130) : ($130) * 100

    = 100%
Know the Answer?