Problem $7-09$

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 $100$;$20$ years later, it was $225.$ What was the annual rate of inflation? Round your answer to the nearest whole number. $\%$

b$.$ Nancy and Pam both currently earn $$110,000.$ If the annual rate of inflation is $5$ percent, how much must each earn after eleven years to maintain their purchasing power? Round your answer to the nearest dollar.

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c$.$ Your parents bought a home for $$40,000$ in Year $1$ and sold it in Year $26$ for $$220,000.$ What was the annual rate of price increase over the $25$ years? Round vour answer to the nearest whole number.

$\%$