If Inflation in Wonderland Averaged About 20% Per Month in 2008

question 48

Multiple Choice

If inflation in Wonderland averaged about 20% per month in 2008, what was the annual inflation rate?

• A)20%
• B)240%
• C)790%
• D)890%

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Definitions:

Savings Account

A deposit account held at a bank or financial institution that earns interest and is designed for the purpose of saving rather than daily transactions.

Mortgage Loan

A loan used to purchase a piece of property, where the property itself serves as collateral for the loan.

Open-Market Sales

The selling of government securities in the open market to reduce the money supply and influence interest rates.

Money Supply

The total amount of money available in an economy at a particular time, including cash, coins, and balances held in checking and savings accounts.