Given the annual rate of inﬂation, the "rule of 70" allows one to
A) determine whether the inﬂation is demand-pull or cost-push.
B) calculate the accompanying rate of unemployment.
C) determine when the value of a real asset will approach zero.
D) calculate the number of years required for the price level to double.

Question

Quizplus · Accepted Answer

The "rule of 70" states that you can estimate the number of years it will take for the price level to double by dividing 70 by the annual rate of inflation. For example, if the annual rate of inflation is 3%, it will take approximately 23.3 years for the price level to double (70/3=23.3). Therefore, option D is the correct choice.

Given the Annual Rate of Inﬂation, the "Rule of 70