ECO 252 Macroeconomics 8 The inflation rate between 1990 an

ECO - 252 Macroeconomics

8. The inflation rate between 1990 and 2005 is 25%. The consumer price index was 129 in 2005.

What was the consumer price index in 1990? Round your answers to 2 decimals. SHOW HOW YOU GET YOUR FINAL ANSWER! No trial-&-error please!

8. According to the given information, the inflation rate between 1990 and 2005 is 25%. The consumer price index was 129 in 2005.

inflation rate between 1990 -2005= {(CPI of 2005 - CPI of 1990)/CPI of 1990)}*100

25% ={(129 - CPI of 1990)/CPI of 1990)}*100

Let CPI of 1990 be y

25/100 =(129-y)/y

1/4 =(129-y)/y

y =516-4y

y+4y =516

5y =516

y=516/5

y=103.2

the consumer price index in 1990 was 103.2