Which scenario reflects an annual inflation rate of 2%? In year 1, the price of a tire is $100. In year 2, the same tire costs $120. In year 1, the price of a candy bar is $0.50. In year 2, the same candy bar is $0.51. In year 1, the price of a pair of shoes is $30. In year 2, the same pair of shoes is $32. In year 1, the price of a pair of headphones is $20. In year 2, the same pair of headphones is $21.

The correct answer is 2. 2. In year 1, the price of a candy bar is $0.50. In year 2, the same candy bar is $0.51.

Price of candy bar in Yr 2 should be = 0.50 * 1.02 = 0.51

This scenario reflects an inflation of 2%.

Step-by-step explanation:

Let's check each scenario and select the one that reflects an annual inflation rate of 2%.

1. In year 1, the price of a tire is $100. In year 2, the same tire costs $120.

Price of tire in Yr 2 should be = 100 * 1.02 = 102

This scenario reflects an inflation of 20%. Not the one we're looking for.

2. In year 1, the price of a candy bar is $0.50. In year 2, the same candy bar is $0.51.

Price of candy bar in Yr 2 should be = 0.50 * 1.02 = 0.51

This scenario reflects an inflation of 2%. This is the correct answer.

3. In year 1, the price of a pair of shoes is $30. In year 2, the same pair of shoes is $32

Price of pair of shoes in Yr 2 should be = 30 * 1.02 = 30.60

This scenario reflects an inflation of 6.7%. Not the one we're looking for.

4. In year 1, the price of a pair of headphones is $20. In year 2, the same pair of headphones is $21.

Price of pair headphones in Yr 2 should be = 20 * 1.02 = 20.40

This scenario reflects an inflation of 5%. Not the one we're looking for.