If the annual inflation rate is 5 percent a year, about how many years will it take for the price level to double?

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asked Nov 12, 2018 103k views

1 Answer

Burning · Answer 1 · 2018-11-18T18:52:45+0000

According to the rule of 72, the doubling time for price level when the inflation rate is r%, is given by

$t= (ln(2))/(ln(1+r/100)) \approx (72)/(r)$

Therefore
t = 72/5 = 14.4 years

Answer: About 14 years.

If the annual inflation rate is 5 percent a year, about how many years will it take for the price level to double?

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