Question

The following graph shows the consumer price index (CPI) for a fictional country from 1990 to 2000.For which of these time periods does the graph show continuous inflation? A.1994 - 2000 B.1990 - 1992 C.1992 - 1996 D.1992 - 1994

Answer 1

Answer:

Option B. 1990 - 1992

Step-by-step explanation:

If we have to calculate inflation rate in year 2000 from 1990, we use the formula

$inflation=\frac{C.P.I. 2000-C.P.I. 1990}{C.P.I 1990}\times 100$

which means if consumer price index is increasing year by year the inflation rate will increase.

Now we analyse our options given with the help of graph given.

A. from 1994 - 2000

Consumer price index increased from year 1994 to 1998 but decreased between 1998 to 2000.

So this option doesn't show the continuous inflation.

B. Year 1990 - 1992

We find a continuous increase in C.P.I. therefore there will be a continuous increase in inflation.

So this option is correct.

C. Year 1992 - 1996

In this gap we see deflation from year 1992 to 1994 then inflation between 1994 - 1996.

So there is ups and downs in this period showing discontinuity in inflation.

D. 1992 - 1994

There is continuous decrease in C.P.I. so continuous deflation is reported between this period.

It's not the correct option.

Answer is Option B.