If the price index increased from 100 in 2021 to 110 in 2022 to 132 in 2023, then the rate of inflation is:
- A. 10%
- B. 32%
- C. 20% ✓
- D. Cannot be determined
Correct Answer: C. 20%
Explanation
The inflation rate can be calculated for each year as follows: 2022: (110-100)/100 = 10%. 2023: (132-110)/110 = 20%. Therefore, the overall rate of inflation from 2021 to 2023 is 20%.
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