CFA actual exam question 2016 Q1

CFA Level III
#1

It asks to find the appropriate subscription option for a university. It gives two inflation numbers … one is for general inflation (2%) and other is the annual inflation in subscription fee.

Why do we add 1% to 2% to calculate overall inflation? Doesnt 2% inflation by default has 1% inflation built into it?

#2

The question states “Inflation plus 1%”. So, you are supposed to add 1% with inflation and that will be 2% + 1% = 3%.