The rate of inflation in Ethiopia was 41% in 2008. What was the percentage decrease that year in the buying power of the birr (the currency of Ethiopia)?
A. 41.0%
B. 69.5%
C. 29.1%
D. 37.5%
let's say I could by a cup of coffee for 100 birr at the end of 2007
at the end of 2008 that cup would cost 141 birr
so I could only buy 100/141 or .7092 of a cup at the end of 2008
my buying power has gone down 1-.709 = .2907
or 29.1 %
because I lost 29.1 percent of my coffee.
D. 37.5% - Inflation measures the rate at which the general level of prices for goods and services is rising, while the decrease in the buying power of a currency reflects the increase in prices. In this case, since the inflation rate was 41%, the buying power of the birr decreased by 41%. Therefore, the percentage decrease in the buying power of the birr in 2008 was 41%, which corresponds to option D.
To calculate the percentage decrease in the buying power of the birr, we need to subtract the inflation rate from 100% and convert it to a percentage.
Percentage decrease = 100% - inflation rate
Percentage decrease = 100% - 41%
Percentage decrease = 59%
Therefore, the correct answer is B. 69.5%.
To calculate the percentage decrease in the buying power of the birr, we need to subtract the inflation rate from 100%.
So, the percentage decrease would be 100% - 41% = 59%.
Therefore, the correct answer is not provided among the options given.