Question

During the worst periods of hyperinflation in a certain country, the price of the food increased at a rate of 20% per month. State whether this increase was linear or exponential. If your food bill was $130 in one month during this period, what was it three months later?

Answer 1

After three months the value of the food bill will be $ 224.64.

Explanation:

Given that during the worst periods of hyperinflation in a certain country, the price of the food increased at a rate of 20% per month, for state whether this increase was linear or exponential, and determine, if your food bill was $ 130 in one month during this period, what was it three months later, the following calculations must be performed:

A hyperinflation raises prices exponentially (the percentage is calculated based on the increase of the previous month). Thus, to calculate the price of the food bill, the following calculation must be performed:

130 x 1.20 ^ 3 = X

130 x 1.728 = X

224.64 = X

Therefore, after three months the value of the food bill will be $ 224.64.