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Inflation rate and "Rule of 70"

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If the CPI was 110 last year and is 121 this year, what is this year's rate of inflation?

What is the "rule of 70"? How long would it take for the price level to double if inflation persisted at (a) 2, (b) 5, and (c) 10 percent per year?

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Solution Summary

Solution describes the steps for determining inflation rate based upon CPI. It also explains the "rule of 70" and discusses how can it be used.

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Solution:

CPI measures the average prices of goods and services bought by the consumers.

Rate of Inflation is the rate of change of general price level and is ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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