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Suppose that the basket of goods for automobiles was last year and this year. What was the
inflation rate over that time period? Calculate your answer to the nearest hundredth of a percent.

Ask by Griffiths Mcguire. in Canada
Mar 31,2025

Upstudy AI Solution

Tutor-Verified Answer

Answer

The inflation rate is approximately 6.00%.

Solution

  1. The formula for the inflation rate is
  2. Substitute the given values:
  3. Compute the difference:
  4. Divide the difference by the old value:
  5. Convert to a percentage:
Thus, the inflation rate over the time period is approximately .

Answered by UpStudy AI and reviewed by a Professional Tutor

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Bonus Knowledge

To calculate the inflation rate, use the formula:
Substituting the given values:
So, the inflation rate over that time period is approximately .
Now, if we take a step back in time, the idea of measuring inflation dates back to ancient civilizations where merchants would keep track of the prices of goods to ensure fair trading. In fact, it was the Roman Empire that first employed a form of taxation based on the value of goods—a precursor to the inflation calculations we utilize today!
Understanding inflation isn’t just for macroeconomic nerds; it’s vital for everyday decision-making! For instance, if you’re setting aside money for future purchases, you need to account for inflation to maintain your purchasing power. Consider diversifying your investments to hedge against inflation; think stocks, real estate, or even inflation-linked bonds!

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