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An inflation rate of 9 percent would erode the purchasing power of the dollar by ____ percent (rounded to one decimal place).

Sagot :

Tundexi

The purchasing power of a dollar will erode by 8.26%.

The purchasing power of $1 if inflation rate is 8% is as follows:

Purchasing power = 1 / (1 + 0.08)

Purchasing power = 1 / 1.09

Purchasing power = 0.91743119

Change in purchasing power = [(0.91743119 - 1) / 1]*100

Change in purchasing power = [(-0.08256881/1} * 100

Change in purchasing power = -0.08256881 * 100

Change in purchasing power = -8.26%

Therefore, the purchasing power of a dollar will erode by 8.26%

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