Results 1 to 2 of 2

Math Help - inflation rate

  1. #1
    Junior Member
    Joined
    Nov 2006
    Posts
    62

    inflation rate

    If the inflation rate is 100j% per annum over a period of n years, what is the purchasing power of a dollar at the end of n years as a percentage of its purchasing power at the beginniing of that period. this is what I did:

    The purchasing power of a dollar at the end of n years of 100% annual inflation is $1.100^-n or 1 and I know this must be set up inncorrectly. The dollar should be less but I don't think this is the right answer.
    Thankx,
    Keith
    Follow Math Help Forum on Facebook and Google+

  2. #2
    Super Member

    Joined
    May 2006
    From
    Lexington, MA (USA)
    Posts
    11,711
    Thanks
    632
    Hello, Keith!

    If the inflation rate is 100% per annum over a period of n years,
    what is the purchasing power of a dollar at the end of n years
    as a percentage of its purchasing power at the beginning of that period?

    I worked out the math behind this problem,
    . . but here's a baby-talk explanation.

    If the inflation is 100% per year,
    . . then an item costing $1 this year will cost $2 next year,
    . . and $4 the next year, then $8 the next year . . .

    In other words, the purchasing power is cut in half every year . . .
    . . to the first year, to the second year, etc.

    At the end of the nth year, $1 will be worth only 1/(2^n) dollars.

    As a percentage, the purchasing power is 100/(2^n) percent.

    Follow Math Help Forum on Facebook and Google+

Similar Math Help Forum Discussions

  1. Inflation rate and purchasing power.
    Posted in the Business Math Forum
    Replies: 7
    Last Post: January 10th 2014, 06:47 PM
  2. Inflation
    Posted in the Algebra Forum
    Replies: 0
    Last Post: November 4th 2009, 03:58 PM
  3. Savings & Inflation
    Posted in the Algebra Forum
    Replies: 1
    Last Post: January 24th 2009, 02:19 PM
  4. [SOLVED] [SOLVED] How to Figure the compounding Inflation rate over time?
    Posted in the Discrete Math Forum
    Replies: 1
    Last Post: February 10th 2008, 10:59 PM
  5. inflation
    Posted in the Business Math Forum
    Replies: 3
    Last Post: February 4th 2008, 06:32 PM

Search Tags


/mathhelpforum @mathhelpforum