The table below shows the Consumer Prices Index (CPI) for an economy over a three-year period:
YearConsumer Prices Index (CPI)Year 1110.0Year 2121.0Year 3127.05 \begin{array}{|c|c|} \hline \text{Year} & \text{Consumer Prices Index (CPI)} \\ \hline \text{Year 1} & 110.0 \\ \hline \text{Year 2} & 121.0 \\ \hline \text{Year 3} & 127.05 \\ \hline \end{array} YearYear 1Year 2Year 3Consumer Prices Index (CPI)110.0121.0127.05Which of the following statements is correct?
The annual rate of inflation in Year 3 was 6.05%6.05\%6.05%
The purchasing power of money increased in Year 3 because the rate of inflation fell
The general price level fell in Year 3 because the economy experienced disinflation
The purchasing power of money fell in both Year 2 and Year 3
