Recall Application 3, "Hyperinflation in Zimbabwe," to answer the following questions:
-An 8 million percent annual increase in the price level implies that if the price of a basket of goods in June 2007 was $100, then in June 2008, the price of the same basket of goods would be:
A) $800 million.
B) $100.
C) $80,000.
D) $8 million.

Question

Quizplus · Accepted Answer

An 8 million percent increase means the price multiplies by 80,000 times (since 8 million percent is 80,000 times the original price). Therefore, $100 becomes $8 million.

Recall Application 3, "Hyperinflation in Zimbabwe," to Answer the Following