Assume there are only two goods in the economy, coffee and doughnuts. In year 1 (base year), the quantity of doughnuts is 10 and the quantity of coffee is 20. Also, the price of doughnuts is $2 and the price of coffee is $4.

In year 2, the quantity of doughnuts is 20 and the quantity of coffee is 10. Also, the price of doughnuts is $1 and the price of coffee is $5.

Using the GDP Deflator and year 1 as the base year, inflation between years 1 and 2 is

-8%

-12.5%

None of the other answers.

-11%

-5%