During Year 1, the cost of a barrel of oil rose from $60 to $110. In Year 2, it then rose again to $115 per barrel. Assume that any change in oil prices has an immediate effect on the overall price level. What effect will these oil price changes have on a country’s Consumer Price Index and on its inflation rate in Year 2 when compared with Year 1?
- ACPI: decrease; rate of inflation: decrease
- BCPI: decrease; rate of inflation: increase
- CCPI: increase; rate of inflation: decrease
- DCPI: increase; rate of inflation: increase