If the rate of inﬂation is 12 percent per year, the price level will double in about
A) 4.1 years.
B) 5.8 years.
C) 10.2 years.
D) 12.4 years.

Question

Quizplus · Accepted Answer

The "Rule of 72" is a quick way to estimate the number of years required to double the price level at a given annual rate of inflation. By dividing 72 by the inflation rate (12 percent in this case), we get approximately 6 years (72/12 = 6). The closest answer provided is 5.8 years.

If the Rate of Inﬂation Is 12 Percent Per Year