If the inflation rate is 4% and a consumer's basket of goods costs $300, what wi

₹0.0

Question: If the inflation rate is 4% and a consumer\'s basket of goods costs $300, what will be the cost of the basket after one year?

Options:

Correct Answer: $312

Solution:

Cost after inflation = 300 * (1 + 0.04) = 300 * 1.04 = $312.

If the inflation rate is 4% and a consumer's basket of goods costs $300, what will be the cost of the basket after one year?

If the inflation rate is 4% and a consumer's basket of goods costs $300, what will be the cost of the basket after one year?

Step 1: Identify the current cost of the basket of goods, which is $300.
Step 2: Identify the inflation rate, which is 4%. Convert this percentage to a decimal by dividing by 100. So, 4% becomes 0.04.
Step 3: To find the new cost after one year, use the formula: Cost after inflation = Current cost * (1 + Inflation rate).
Step 4: Plug in the values: Cost after inflation = 300 * (1 + 0.04).
Step 5: Calculate (1 + 0.04) which equals 1.04.
Step 6: Now multiply: 300 * 1.04 = 312.
Step 7: The cost of the basket after one year will be $312.

Inflation Calculation – Understanding how to adjust the cost of goods based on a given inflation rate.