The rate of inflation in Ethiopia was 41% in 2008. What was the percentage decrease that year in the buying power of the birr (the currency of Ethiopia)?

Question

Quizplus · Accepted Answer

To find the percentage decrease in buying power, we need to subtract the rate of inflation from 100% and then take the percentage of the result.

100% - 41% = 59%

So the buying power decreased by 59%.

To check, we can also use the formula:

percentage change = (new value - old value) / old value x 100%

Let's say the old value was 1 birr. After a 41% inflation, the new value would be:

new value = old value + (41% x old value) = 1 + 0.41 = 1.41 birr

So the percentage decrease in buying power would be:

percentage change = (1 - 1.41) / 1 x 100% = -29.1%

This means the buying power decreased by 29.1%, which matches with answer choice B.

The Rate of Inflation in Ethiopia Was 41% in 2008