Inflation

Assuming that the annual inflation rate in the year 2006 is expressed by the figure 5.8%, that is, the real value of monetary units (for example, crowns, euros, dollars), expressing the possibility of purchasing goods, decreased in the year 2006 by 5.8%. By how much is the purchasing power in the above example lower than the actual amount in the account?

Final Answer:

x =  5.48 %

Step-by-step explanation:

$$\begin{gathered} r_1=100\%+5.8\%=1+\frac{5.8}{100}=1.058 \\ {r}_1\cdot r_2=1 \\ {r}_2=1/r_1=1/1.058=\frac{500}{529}\doteq 0.9452 \\ x=100\cdot (1-r_2)=100\cdot (1-0.9452)=5.48\% \end{gathered}$$

Try another example