If the inflation rate is 6% and a consumer's basket of goods costs $500, what wi

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Question: If the inflation rate is 6% and a consumer\'s basket of goods costs $500, what will be the cost of the basket after one year?

Options:

Correct Answer: $530

Solution:

Cost after inflation = 500 * (1 + 0.06) = 500 * 1.06 = $530.

If the inflation rate is 6% and a consumer's basket of goods costs $500, what will be the cost of the basket after one year?

If the inflation rate is 6% and a consumer's basket of goods costs $500, what will be the cost of the basket after one year?

Step 1: Identify the current cost of the basket of goods, which is $500.
Step 2: Identify the inflation rate, which is 6%. Convert this percentage to a decimal by dividing by 100. So, 6% becomes 0.06.
Step 3: To find the new cost after one year, use the formula: Cost after inflation = Current cost * (1 + Inflation rate).
Step 4: Substitute the values into the formula: Cost after inflation = 500 * (1 + 0.06).
Step 5: Calculate (1 + 0.06) which equals 1.06.
Step 6: Now multiply the current cost by 1.06: 500 * 1.06.
Step 7: Calculate the final result: 500 * 1.06 = $530.

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