Many Economists View a 3% Annual Inflation Rate as "Acceptable

question 279

Multiple Choice

Many economists view a 3% annual inflation rate as "acceptable". Assuming a 3% annual increase in the price of automobiles, how much will a new Suburban cost you five years from now, if today's
Price is $48,000?

• A) $41,405
• B) $48,000
• C) $54,024
• D) $55,200
• E) $55,645

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Definitions:

Deposits

Funds placed into an account at a financial institution for safekeeping.

Adjusted Cash Balance

The cash balance reported on a company's financial statements, modified for checks that have not yet cleared or deposits in transit.

Outstanding Checks

Checks that have been written and recorded in a ledger but have not yet been cashed or cleared by the bank.

Outstanding Deposit

Funds that have been deposited but not yet credited to the depositor's account.