By what percentage did the GDP price index change from the first to the second year?

To determine the percentage change in the GDP price index from the first to the second year, you would need to know both the initial value of the GDP price index in the first year and the final value in the second year. The formula for calculating the percentage change is:

[ \text{Percentage Change} = \left( \frac{\text{Final Value} - \text{Initial Value}}{\text{Initial Value}} \right) \times 100

]

If the answer indicates a change of 20%, it reflects a significant rise in the price level of goods and services produced in the economy over that period. A 20% increase means that the price level has escalated considerably, suggesting inflationary pressures within the economy. This change can impact consumer behavior, business investment decisions, and monetary policy, as higher prices may lead to changes in interest rates or economic strategies to manage inflation.

In this situation, without knowing the specific values for the GDP price index, you can infer that the answer of 20% represents a notable increase in the overall price level within the economy, indicating the need for economic adjustments. Understanding such changes enables economists and policymakers to evaluate the economic environment accurately and make informed decisions based on price level movements