Economics: Principles, Problems, and Policies, 19th Edition

Published by McGraw-Hill Education
ISBN 10: 0073511447
ISBN 13: 978-0-07351-144-3

Chapter 26 - Business Cycles, Unemployment, and Inflation - Problems - Page 545: 4

Answer

10%, -1.82% (deflation)

Work Step by Step

The inflation rate is equal to the percentage change in CPI, so for the first scenario, we have $\frac{121 - 110}{110}$ = 10%. For the next scenario, we have $\frac{108 - 110}{110}$ = -1.82%. This is classified as deflation.
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