Question

The price index was 128 in 2013, and the inflation rate was 24 percent between 2012 and 2013. The price index in 2012 was Select one: a. 158.7. b. 104.0. c. 152.0. d. 103.2.

Answer 1

Answer:  d. 103.2.

Step-by-step explanation:

Formula for inflation rate = $\dfrac{PI_2-PI_1}{PI_1}\times100$

, where $PI_1$  = Price index in first period

$PI_2$ = Price index in second period.

As per given , we have

The inflation rate between 2012 and 2013= 24%

The price index was 128 in 2013.

i.e. $PI_2=128$

Let x be the price index in 2012

Then, we have

$\dfrac{128-x}{x}\times100=24$   [Substitute all values in formula]

$128-x=0.24x\\\\ 0.24x+x=128\\\\ 1.24x= 128\\\\ x=\dfrac{128}{1.24}\approx103.2$

Hence, the  price index in 2012 was 103.2.

So , the correct option is d. 103.2.