As applied to the price level, the "rule of 70" indicates that the number of years required for the price level 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" is a way to estimate the number of years it takes for a quantity to double, given a constant annual growth rate. It is calculated by dividing 70 by the annual growth rate (in this case, the annual rate of inflation).

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