Question

In Canada, the rate of inflation (i.E. How much things cost) is about 2.0%/year. In other words, the real value of your money is worth 2.0% less each year. Imagine you have $2250 in savings under your mattress

Answer 1

Explanation:

If you have $2250 as against an inflation rate of 2% every year, this then means that after the first year, the value of your money becomes

2250 * 2% =

2250 * 0.02 = 45

2250 - 45 = $2205

At the end second year

$2205 * 2% =

$2205 * 0.02 = 44.1

$2205 - 44.1 = 2160.9

At end of the third year

$2160.9 - 2% =

$2160.9 * 0.02 = 43.218

$2117.682

And so on, and so forth