Answer: 10%
Explanation:
[tex]Real GDP_{1} = 500
Real GDP_{2} = 530 Nominal GDP_{1} = 600
Nominal GDP_{2} = 700[/tex]
[tex]GDP deflator = \frac{Nominal GDP}{Real GDP}*100[/tex]
GDP Deflator 1 = [tex]\frac{600}{500} * 100= 120[/tex]
GDP Deflator 2 = [tex]\frac{700}{530} * 100= 132[/tex]
Inflation = % Change in GDP Deflator
[tex]= \frac{132-120}{120} * 100
= \frac{12}{120} * 100
= 10%[/tex]
Thus, the inflation rate is 10%.
