Suppose that inflation is 3% per year. This means the cost of an item increases by 3% each year. Suppose a jacket cost $150 in 2011. Find a formula that gives the cost of the jacket C in dollars after t years. A)C = $150 + 1.03^t B)C = $150 × 1.03^t C)C = $150 × 1.3^t D)C = $150 + 1.3^t

Question

Quizplus · Accepted Answer

To find the cost of the jacket after t years, we need to multiply the original cost ($150) by the inflation factor (1 + 0.03)^t, which gives us $150 × 1.03^t. This is equivalent to choice B, C = $150 × 1.03^t. The other options have incorrect calculations or include an additional factor that is not necessary.

Suppose That Inflation Is 3% Per Year