As a result of inflation, the purchasing power of a fixed quantity of money decreases by 5% every year. If a certain quantity of money can buy 175 frozen dinners this year, how many frozen dinners can it buy in 12 years?
If necessary, round your answer to the nearest whole number.
The purchasing power of a fixed quantity of money decreases by 5% each year, which means the purchasing power decreases to 95% of its value each year.
In 12 years, the purchasing power would decrease to (0.95)^12 = 0.56651, or approximately 56.651% of its original value.
If a certain quantity of money can buy 175 frozen dinners this year, in 12 years it would be able to buy 175*0.56651 = 99.127 frozen dinners.
Rounding to the nearest whole number, it can buy approximately 99 frozen dinners in 12 years.