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Homework answers / question archive / Using 2018 as the base year, if we use CPI deflator and get the inflation rate between 2017 and 2018 is 10%, then CPI an 2017

Using 2018 as the base year, if we use CPI deflator and get the inflation rate between 2017 and 2018 is 10%, then CPI an 2017

Economics

Using 2018 as the base year, if we use CPI deflator and get the inflation rate between 2017 and 2018 is 10%, then CPI an 2017 . , A. 110.0 B. 90.9 C. 90.0 D. 85.0 
 

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Answer

B.

Explanation

Computation of CPI in 2017:

Given,

Base Year (2018) CPI = 100

Inflation Rate between 2017 and 2018 = 10%

So,

100/CPI for 2017 = 1+10%

100/CPI for 2017 = 1.10

CPI for 2017 = 100/1.10

CPI for 2017 = 90.9

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