Inflation is a general increase in prices and may be measured by the Consumer Price Index (CPI). Use Appendix A to answer the questions.

a. In Year 1 the CPI was 100; 30 years later, it was 239. What was the annual rate of inflation? Round your answer to the nearest whole number...... %?

b. Nancy and Pam both currently earn $90,000. If the annual rate of inflation is 3 percent, how much must each earn after ten years to maintain their purchasing power? Round your answer to the nearest dollar. $...?

c. Your parents bought a home for $50,000 in Year 1 and sold it in Year 26 for $280,000. What was the annual rate of price increase over the 25 years? Round your answer to the nearest whole number. .......%?

appendix A

Interect Fartnors for the Filure Value of One Dollar