Many economists view a 3% annual inﬂation rate as "acceptable". Assuming a 3% annual increase in the price of automobiles, how much will a new Suburban cost you ﬁve years from now, if today's
Price is $48,000?
A) $41,405
B) $48,000
C) $54,024
D) $55,200
E) $55,645

Question

Quizplus · Accepted Answer

To calculate the future cost, use the formula for compound interest: Future Value = Present Value * (1 + rate)^n. Here, $48,000 * (1 + 0.03)^5 = $55,645.

Many Economists View a 3% Annual Inﬂation Rate as "Acceptable