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) × (100/2) .
B) [(P₂ - P₁) /P₁] × 100.
C) [(P₂ - P₁) /P₁] × [100/2].
D) [(P₁ - P₂) /P₂] × 100.
E) [(P₁ - P₂) /P₂] × [100/2].