Between 1967 and 1977 the price level approximately doubled.On the basis of this information we can say that the average annual rate of inflation over this ten-year period was about:
A)10 percent.
B)7 percent.
C)4 percent.
D)2 percent.

Question

Quizplus · Accepted Answer

To calculate the average annual rate of inflation over the period, we can use the formula: (ending price level/starting price level)^(1/number of years) - 1. 
In this case, the ending price level is twice the starting level, so (2/1)^(1/10) -1 = 0.072 or approximately 7 percent. Therefore, the best choice is B.

Between 1967 and 1977 the Price Level Approximately Doubled