Suppose the rate of inflation this year is 4.5%. What is the percentage decrease in the buying power of a dollar?
a) 4.3%
b) 4.7%
c) None of the above.
a 4.3
c) None of the above.
Because the rate of inflation is 4.5%, it means that the value of the dollar has decreased by 4.5%. So, the percentage decrease in the buying power of a dollar would also be 4.5%. However, none of the options listed in the question match this answer. Maybe the percentage decrease in the buying power of a dollar took a vacation?
To calculate the percentage decrease in the buying power of a dollar, we can use the formula:
Percentage decrease = Inflation rate / (1 + Inflation rate) * 100%
Given that the rate of inflation this year is 4.5%, let's calculate the percentage decrease:
Percentage decrease = 4.5% / (1 + 4.5%) * 100%
= 4.5% / (1 + 0.045) * 100%
= 4.5% / 1.045 * 100%
≈ 4.3%
Therefore, the correct answer is a) 4.3%.
To find the percentage decrease in the buying power of a dollar due to inflation, we need to subtract the rate of inflation from 100% and then calculate the percentage of the remaining value.
The rate of inflation this year is 4.5%. To determine the percentage decrease in buying power, we subtract this inflation rate from 100%.
100% - 4.5% = 95.5%
Therefore, the buying power of a dollar has decreased by 95.5%.
Now, let's check the given options:
a) 4.3%: This option represents an increase, not a decrease, so it's incorrect.
b) 4.7%: This option also represents an increase, so it's incorrect as well.
c) None of the above: This option is correct.
The correct answer is c) None of the above.