Over the past year, price inflation has been 10%, but the price of a used Ford Escort has fallen from $6,000 to $5,000. The real price of a Ford Escort has fallen by:
A) 12%.
B) 17%.
C) 20%.
D) 24%.
E) 32%.

Question

Quizplus · Accepted Answer

The real price change accounts for inflation, so the adjusted initial price is $6,000 * 1.10 = $6,600. The price fell to $5,000, so the real price change is ($5,000 - $6,600) / $6,600 = -24%.

Over the Past Year, Price Inflation Has Been 10%, but the Price