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Compute the average annual rate of inflation that prevailed between 1980 and 2018. The CPI in...

Compute the average annual rate of inflation that prevailed between 1980 and 2018. The CPI in 1980 is 32.81; ?1980=32.81, and the CPI in 2018 is 100; ?2018=100. Please begin with a general formula to compute the average annual rate.

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Expert Solution

Answer:-

=> Rate of inflation = 2018 CPI - 1980 CPI / 1980 CPI *100

= 100 - 32.81 / 32.81 *100

= 204.7851%

=> Average annual rate = 204.7851 / 38 YEARS

= 5.39%

Rahul Sunny answered 2 years ago
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