As applied to the price level, the "rule of 70" indicates that the number of years required for the price to double can be found by:
A)dividing "70" into the annual rate of inflation.
B)dividing the annual rate of inflation into "70."
C)subtracting the annual change in nominal incomes from "70."
D)multiplying the annual rate of inflation by "70."

Question

Quizplus · Accepted Answer

The "rule of 70" states that the number of years required for the price level to double can be found by dividing the annual rate of inflation into 70. For example, if the inflation rate is 3.5%, it would take approximately 20 years (70 divided by 3.5) for prices to double.

As Applied to the Price Level, the "Rule of 70