Question

The purchasing power of $50,000 in 1970 was _____ the purchasing power of $200,000 in 2007. a. less than b. more than c. the same as d. not comparable to

Answer 1

b more than



hope this helps

Answer 2

Option B.More than, is the correct option.

Explanation:

If purchasing power in 1970 was $50000 and we have to calculate the purchasing power in 2007.

During this period of 37 years change in inflation rate was 4.46% so the purchasing power of $50000 will become

`P=P_(0)(1+(r)/(100))^(t)`

`P=50000(1+(4.46)/(100))^(37)`

`P=50000(1.0446)^(37)=50000.(5.025)`

P = $251258

Which is very high as compared to $200000.

Therefore purchasing power in 1970 was more than in 2007.

Option B.is the correct option.