question on a econ test.. need help
2007-03-04 12:30:31 · 2 answers · asked by j_oli07 2 in Social Science ➔ Economics
Are you sure it is not the rule of 70?
This is the formula (rule of thumb) for when your purchasing power will halve due to inflation.
Example, yearly inflation is at 3.5%, how many years will it take for 1 dollar of today to buy half what it can buy today.
70/3.5 = 20
20 years
2007-03-05 01:48:47 · answer #1 · answered by MSDC 4 · 0⤊ 0⤋
I am unfamiliar with the rule of 7, but the rule of 72, 71, and 70 is a finance concept that deals with how quickly an investment will double. In order to calculate it, the compounding interest rate is divided into 72, although some use the other numbers, and that will tell you how many years are needed to double the investment.
2007-03-07 14:54:48 · answer #2 · answered by theeconomicsguy 5 · 0⤊ 0⤋