If inflation in Wonderland averaged about 20% per month in 2000,what was the approximate annual inflation rate?
A) 20%
B) 240%
C) 790%
D) 890%

Name: If inflation in Wonderland averaged about 20% per month in 2000,what was the approximate annual inflation rate? A) 20% B) 240% C) 790% D) 890%
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Question

Quizplus · Accepted Answer

To calculate the approximate annual inflation rate we need to use the formula: 
(1 + monthly inflation rate)^12 -1. 
Plugging in the values, we get (1+0.20)^12 -1 = 7.9 or 790%. Therefore, the correct answer is C.

If Inflation in Wonderland Averaged About 20% Per Month in 2000,what