If a dollar bought 1,000 Chilean pesos 10 years ago and 1,500 pesos now,and inflation for that period was 25 percent in the United States and 100 percent in Chile,then:

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Quizplus · Accepted Answer

Although the exchange rate between the US dollar and Chilean peso has increased from 1,000 pesos to 1,500 pesos in 10 years, the inflation rates in both countries must also be considered. The US inflation rate was 25%, meaning that a dollar's purchasing power decreased by 25%. On the other hand, the inflation rate in Chile was 100%, indicating that the value of the Chilean peso decreased fourfold. Therefore, even though a dollar can buy more pesos now, in reality, a dollar has lost purchasing power compared to 10 years ago. This implies that traveling in Chile is more costly now than it was a decade ago.

If a Dollar Bought 1,000 Chilean Pesos 10 Years Ago