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Diano4ka-milaya [45]
4 years ago
5

How long would it take for the price level to double if inflation persisted at the following percentages?

Business
1 answer:
Alekssandra [29.7K]4 years ago
3 0

Answer:

inflation rate = 17.5 percent per year  ⇒ it will take 4 years to double

inflation rate =  35 percent per year  ⇒ it will take 2 years to double

inflation rate =  3.5 percent per year ⇒ it will take 20 years to double

Explanation:

we can use the rule of 70 to determine the amount of time it would take the general price level to double.

the rule of 70 is a simple way we can use to estimate the number of years it will take an investment to double given a certain growth rate.

70 / 17.5 =  4 years

70 / 35 =  2 years

70 /  3.5 = 20 years  

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Commercial banks however tend to be reluctant when the economy is stagnant. Mostly small businesses in an economy that is slow have challenges repaying loans collected.

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