Question

The consumer price index was over 100 in one year and 330 ten years later. The value of the purchasing power of the dollar over the ten years fell by:

Answer 1

The purchasing power of the dollar fell to 30.3% of its value over ten years with the CPI rising from 100 to 330, indicating a decrease of about 69.7%.

Step-by-step explanation:

The question pertains to the concept of inflation and how it affects the purchasing power of money over time. Using the consumer price index (CPI) as a measure, we can determine the decrease in purchasing power by looking at the CPI values at two different points in time. Originally, if the CPI was 100 and increased to 330 over ten years, we calculate the decline in purchasing power by using the formula (Old CPI / New CPI) × 100. This calculation would look like (100 / 330) × 100, which equals approximately 30.3. Hence, the purchasing power of the dollar fell to about 30.3% of what it was ten years previously, which means purchasing power decreased by approximately 69.7%.