Question

If a 3% annual rate of inflation persists, the price level will double in ______ years.

Answer 1

Using the Rule of 72, it's estimated that at a 3% annual inflation rate, the price level will double in approximately 24 years.

Step-by-step explanation:

If a 3% annual rate of inflation persists, the price level will double in a certain number of years. This can be estimated using the Rule of 72, which is a simple way to determine how long an investment will take to double given a fixed annual rate of interest. By dividing 72 by the annual rate of inflation (3%), we can estimate the number of years it will take for the price level to double.

Using the Rule of 72:
72 ÷ 3 = 24 years

Therefore, at a 3% annual inflation rate, the price level will double in approximately 24 years.