If inflation is 3.4% per year,what does the purchasing power of $1 today become in 10 years?
A)$0.716
B)$0.746
C)$1.340
D)$1.397

Name: If inflation is 3.4% per year,what does the purchasing power of $1 today become in 10 years? A)$0.716 B)$0.746 C)$1.340 D)$1.397
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Quizplus · Accepted Answer

The purchasing power of money decreases with inflation. Using the formula for future value with inflation: Future Value = Present Value / (1 + inflation rate)^number of years, we get $1 / (1 + 0.034)^10 ≈ $0.716.

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