Question

The inflation rate of the U.S. dollar is 3.1 percent. What this means is that every year, prices increase by 3.1 percent. If a paperback book cost 1.98$ three years ago, what does it cost now?

A. 1.80$
B. 2.17$
C. 2.04$
D. 5.76$

Answer 1

One year: 3.1% of 1.98 = .06, 1.98+.06=2.04
Two years: 3.1% of 2.04 = .06, 2.04+.06=2.10
Three years: 3.1% of 2.10 = .07, 2.10+.07=2.17
Answer: $2.17