Help please!

Bart had an income of $38,250 last year. If the inflation rate is 4.5%, what is his purchasing power?

A. $33,614.85
B. $34,543.75
C. $34,998.15
D. $36,528.75

Answers

Answer 1

Answer:  D) $36,528.75

=======================================================

Explanation:

Positive inflation eats away at the purchasing power of money.

If inflation is 4.5%, then the purchasing power goes down by 4.5% meaning his purchasing power is 100% - 4.5% = 95.5% of what it used to be.

95.5% of $38,250 = 0.955*38250 = 36,528.75

So his purchasing power is $36,528.75

Answer 2

The purchasing power of Bart by the income of last year is option D. $36,528.75.

What is Inflation?

Inflation can simply be defined as the increase in the rate of the prices over a period of time. In other words, inflation describes how much more expensive has a commodity or service becomes in a period of time.

It is clear that, inflation decreases the purchasing power of money.

Given that, the inflation rate is 4.5%.

Also, Bart had an income of $38,250 last year.

Purchasing power will get decreased by 4.5%.

Purchasing power = $38,250 - ($38,250 × 4.5%)

                              = $38,250 - (1721.25)

                              = $36,528.75

Hence the purchasing power of Bart is $36,528.75.

To learn more about Inflation, click on the link given below :

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Answers

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