Question
1. Suppose the buying power of the dollar decreases by 6.7% this year. What is the rate of inflation this year?
a) 7.6%
b) 7.2%
c) None of the above.
a) 7.6%
b) 7.2%
c) None of the above.
Answers
Steve
1/(1+r) = 1-.067 = .933
1+r = 1.0718
r = 7.2%
1+r = 1.0718
r = 7.2%