A country has an inflation rate of 3%. If a product costs $200 now, what will be

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Question: A country has an inflation rate of 3%. If a product costs $200 now, what will be its cost after one year?

Options:

Correct Answer: $206

Solution:

Cost after inflation = 200 * (1 + 0.03) = 200 * 1.03 = $206.

A country has an inflation rate of 3%. If a product costs $200 now, what will be its cost after one year?

A country has an inflation rate of 3%. If a product costs $200 now, what will be its cost after one year?

Step 1: Identify the current cost of the product, which is $200.
Step 2: Identify the inflation rate, which is 3%. Convert this percentage to a decimal by dividing by 100. So, 3% becomes 0.03.
Step 3: To find the new cost after one year, use the formula: New Cost = Current Cost * (1 + Inflation Rate).
Step 4: Plug in the values: New Cost = 200 * (1 + 0.03).
Step 5: Calculate (1 + 0.03) which equals 1.03.
Step 6: Now multiply: 200 * 1.03 = 206.
Step 7: The cost of the product after one year will be $206.

Inflation Calculation – Understanding how to adjust prices based on a given inflation rate.