Given the Annual Rate of Inflation, the "Rule of 70

question 41

Multiple Choice

Given the annual rate of inflation, the "rule of 70" allows one to

• A)determine whether the inflation is demand-pull or cost-push.
• B)calculate the accompanying rate of unemployment.
• C)determine when the value of a real asset will approach zero.
• D)calculate the number of years required for the price level to double.

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Definitions:

Obligation

A duty or commitment to pay money or perform some action in the future, often legally enforceable.

Present Value

Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return.

Excavation

The process of removing soil, rock, or other materials from a site to form an open hole or cavity.