Over the past 70 years, what was the approximate average annual inflation rate?
A)3 percent, implying that prices have increased 12-fold
B)4 percent, implying that prices have increased 16-fold
C)3 percent, implying that prices have increased 18-fold
D)5 percent, implying that prices increased about 18-fold

Question

Quizplus · Accepted Answer

According to historical U.S. inflation data, the average annual inflation rate over the past 70 years has been approximately 3.5%. Using the rule of 72 (where you divide 72 by the annual inflation rate to find how many years it takes for prices to double), we can see that prices would have doubled approximately every 20.6 years (72 / 3.5). Over 70 years, this means that prices would have doubled approximately 3.4 times (70 years / 20.6 years to double). Therefore, prices would have increased approximately 16-fold (2 to the power of 3.4) over the past 70 years, implying an average annual inflation rate of around 4 percent.

Over the Past 70 Years, What Was the Approximate Average