Question

How long will it take for prices in the economy to double at a 6% annual inflation rate? Round to the nearest hundredth.

A) 10.24 years B) 23.45 years C) 18.85 years D) 11.90 years

Answer 1

answered below

Answer 2

I diooko

Answer 3

[AI-generated answer — Explain Bot]

To determine how long it will take for prices in the economy to double at a 6% annual inflation rate, we can use the rule of 72. The rule of 72 is a simple mathematical approximation used to estimate the time it takes for an investment or value to double, given a fixed annual growth rate.

The formula for the rule of 72 is:

Years to double = 72 / growth rate

In this case, the growth rate is the inflation rate of 6%. Let's plug in the values:

Years to double = 72 / 6

Simplifying this equation, we find:

Years to double = 12

Therefore, it will take approximately 12 years for prices in the economy to double at a 6% annual inflation rate.

However, none of the options provided matches this result exactly. The closest option is 11.90 years (option D), so that would be the closest approximation when rounding to the nearest hundredth.