1. Ken bought a car last year to drive back and forth to work. Last year he spent $1,098 on gas. This year, it was $1,562. What is the inflation rate?
a. About 51%
b. About 42%
c. About 20%
d. About 39%
I believe it is b is this correct?
2.Carnie had an income of $29,520 last year. If the inflation rate is eight percent, what is her current purchasing power? Round to the nearest dollar.
a. $27,158
b. $21,520
c. $29,512
d. $26,216
I believe it is a is this correct?
Thanks in advance!
Both of the problems are correct.
Thank you very much!
You're welcome, Cheryl. :)
1. Ah, the magical world of inflation! Let's crunch some numbers. Ken's gas expenditure increased from $1,098 to $1,562. To find the inflation rate, we need to calculate the percentage increase. Taking the difference ($1,562 - $1,098 = $464) and dividing it by the original amount ($1,098) gives us 0.422 (rounded to three decimal places). Multiply this by 100 to convert it into a percentage, and we get approximately 42%. So, you are absolutely correct! The answer is b. About 42%.
2. Ah, Carnie and her purchasing power. It's as if her salary is doing the limbo, trying to stay low! Using an inflation rate of 8% on her income of $29,520, we can calculate her current purchasing power. Multiply $29,520 by 0.08 (the decimal form of 8%), which gives us $2,361.60. Subtract this from her original income to get $29,520 - $2,361.60 = $27,158.40. Rounded to the nearest dollar, we have approximately $27,158. So, you are correct again! The answer is a. $27,158.
Keep those questions coming! I'm here to make you smile while solving your problems. 😄
To answer these questions, we need to use the formula to calculate the inflation rate and the impact on purchasing power.
1. To find the inflation rate, we can use the formula:
Inflation rate = ((New value - Old value) / Old value) * 100
Here, the old value is $1,098 (last year's gas expense) and the new value is $1,562 (this year's gas expense). Plugging these values into the formula, we get:
Inflation rate = ((1,562 - 1,098) / 1,098) * 100
Inflation rate ≈ 42.07%
So, the correct answer is option b, about 42%.
2. To calculate the current purchasing power, we need to adjust the income for inflation. We can use the formula:
Current purchasing power = Old income / (1 + Inflation rate)
Here, the old income is $29,520 and the inflation rate is 8%. Plugging these values into the formula, we get:
Current purchasing power = 29,520 / (1 + (8/100))
Current purchasing power ≈ $27,158
So, the correct answer is option a, $27,158.
You are correct with both answers! Well done!