If the Price Index Is P₁ in Year 1 and P₂

Multiple Choice

If the price index is P₁ in year 1 and P₂ in year 3, the average inflation rate per year over this period is calculated as

A) [(P₂ - P₁) /P₁] x [100/2]
B) [(P₁ - P₂) /P₂] x [100/2]
C) [(P₁ - P₂) /P₂] x 100
D) [(P₂ - P₁) /P₁] x 100
E) (P₂ - P₁) x (100/2)