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2 years ago

Answer the following questions about the (real) inflation tax, assuming that the price level starts at 100.

Business

1 answer:

Rus_ich [418]2 years ago

7 0

Answer:

a) $900 after 1 year

b) $810 after 2 years

Explanation:

This deals with the time value of money concept. This states that money is worth more today than the same amount is worth sometime in the future. The real purchasing power is the nominal purchasing power discounted back as per the prevailing inflation rate.

For a)

$1000 after one year will be worth 1000 * 0.9 = $900 or a reduction of $100 as 1000 today is worth only 900 after 1 year.

For b)

The inflation rate discounts real purchasing power year over year so after 2 years the real purchasing power will be as follows,

Real purchasing power = 900 * 0.90 = $810 which is discounted by 10% inflation for 2 years.

Hope that helps.

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3 years ago

What was the average annual economic growth rate in Singapore over the 22.00 years from 1957 to 1979

borishaifa [10]

The average annual economic growth rate in Singapore over the 22.00 years from 1957 to 1979 was 3.20%.

<h3>What is average annual economic growth rate (AAGR) ?</h3>

The average annualised return of a portfolio, asset, or cash flow over time is known as the average annual growth rate, or AAGR.

The basic arithmetic mean of a set of returns is used to calculate AAGR.

Calculation for average annual economic growth rate:

Real per capita GDP in Singapore in 1957 was about $400 and it doubled to about $800.00 by 1979 over the period of 22 years.

Growth rate = $(\frac{last value}{initial value} )^{\frac{1}{n} } -1$

The last value = $800

The initial value = $400

n = number of years

Growth rate = $(\frac{800}{400} )^{\frac{1}{22} } -1$

= $(2)^{\frac{1}{22} } -1$

= 1.032 - 1

= 0.032

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= 3.2%

Therefore, the growth rate in Singapore over 22 years are 3.2%.

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1 year ago

Jeremy is making a trail mix containing raisins and peanuts. Raisins cost $1. 50 per pound. Peanuts cost $2. 50 per pound. Jerem

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The equation that Jeremy can use to determine the amount of raisins in the trail mix will be C. 1.5r + 2.5(5 - r) = 10.50

Let r = the amount of raisins

Let p = the amount of peanuts

The equation will be:

r + p = 5 ...... i

1.5r + 2.5p = 10.50

From equation i, p = 5 - r .. iii

Equation iii will be substituted into ii

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In conclusion, the correct option is C.

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