Question

22)

How long would it take for the price level to double if inflation persisted at the following percentages? Instructions: Enter your answers as whole numbers. a. 2 percent per year: b. 5 percent per year: c. 10 percent per year:

Answer 1

Answer : Inflation is defined as the sustained rise in the general price level of certain goods and services in an economy over a period of time.

for solving the above problem we can apply the RULE OF 70 i.e. the number of years for CPI to double is equal to 70 divided by the rate of inflation.

1. Number of years for CPI to double=

=70÷ percentage of inflation

=70÷ 2

=35 years

2. Number of years = 70 ÷ % of inflation

= 70 ÷ 5

= 14 years

3. Number of years = 70 ÷ % of inflation

= 70 ÷ 10

= 7 years

Hope it helps!