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If the CPI shows that the new price for a basket of goods is [tex]$630 and the original price is $[/tex]600, what is the rate of inflation?

A. 10%
B. 20%
C. 1%
D. 5%

Sagot :

GinnyAnsweridn
To find the rate of inflation, we need to determine how much the price has increased relative to the original price. The formula for calculating the rate of inflation is given by:

[tex]\[ \text{Inflation Rate} = \frac{\text{New Price} - \text{Original Price}}{\text{Original Price}} \times 100\% \][/tex]

Given:
- Original Price = \[tex]$600 - New Price = \$[/tex]630

Let's plug these values into the formula and solve step-by-step:

1. Find the difference between the new price and the original price:
[tex]\[ \text{New Price} - \text{Original Price} = 630 - 600 = 30 \][/tex]

2. Divide this difference by the original price:
[tex]\[ \frac{30}{600} = 0.05 \][/tex]

3. Convert the result from a decimal to a percentage by multiplying by 100:
[tex]\[ 0.05 \times 100 = 5\% \][/tex]

Therefore, the rate of inflation is:

D. 5%
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