Inflation is a term used to describe the erosion of the purchasing power of money. For example, if the annual inflation rate is 3 % , then $ 1000 worth of purchasing power now will have only $ 970 worth of purchasing power in 1 year because 3 % of the original $ 1000 ( 0.03 × 1000 = 30 ) has been eroded due to inflation. In general, if the rate of inflation averages r per annum over n years, the amount A that $ P will purchase after n years is A = P ⋅ ( 1 − r ) n where r is expressed as a decimal. Inflation If the amount that $ 1000 will purchase is only $ 950 after 2 years, what was the average inflation rate?
Inflation is a term used to describe the erosion of the purchasing power of money. For example, if the annual inflation rate is 3 % , then $ 1000 worth of purchasing power now will have only $ 970 worth of purchasing power in 1 year because 3 % of the original $ 1000 ( 0.03 × 1000 = 30 ) has been eroded due to inflation. In general, if the rate of inflation averages r per annum over n years, the amount A that $ P will purchase after n years is A = P ⋅ ( 1 − r ) n where r is expressed as a decimal. Inflation If the amount that $ 1000 will purchase is only $ 950 after 2 years, what was the average inflation rate?
Solution Summary: The author explains that inflation is a term used to describe the erosion of the purchasing power of money.
To find:Inflation is a term used to describe the erosion of the purchasing power of money. For example, if the annual inflation rate is , then worth of purchasing power now will have only worth of purchasing power in 1 year because of the original has been eroded due to inflation. In general, if the rate of inflation averages per annum over years, the amount
that will purchase after years is where is expressed as a decimal. Inflation If the amount that will purchase is only after 2 years, what was the average inflation rate?
Precalculus: Concepts Through Functions, A Unit Circle Approach to Trigonometry (4th Edition)
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