The "Rule of 72" is a reliable guide to the impact of inflation. It is based on dividing 72 by the annual inflation rate to find out the number of years it will take the price of something to double. For example, if you bought an antique chair for $100, and the annual inflation rate is 5 percent, how long would it take for the chair to be worth $200? Using the Rule of 72, divide 72 by 5 and get 14.4. It would take about 14 years for the chair's worth to double. 1. Calculate the values below using the Rule of 72. a. If you bought a house for $150,000 and the annual inflation rate was 4 percent, how long would it take before the house, under good maintenance, would be worth $300,000? b. If you bought a Picasso painting at last week's auction for $200,000 and the annual inflation rate is 10 percent, how long would it take to double your money? c. If you went to the car show and bought a 1965 Mustang in mint condition for $25,000 and the annual inflation rate was 8 percent, when would your investment double
Directions: Answer each question below by writing a strong paragraph that includes supporting information from the lesson. Please cite your outside resources.
A strong paragraph includes a minimum of three to five details from the lesson and is written in Academic English form. For more information on Academic English form, refer to the documents in the Orientation.
The "Rule of 72" is a reliable guide to the impact of inflation. It is based on dividing 72 by the annual inflation rate to find out the number of years it will take the price of something to double. For example, if you bought an antique chair for $100, and the annual inflation rate is 5 percent, how long would it take for the chair to be worth $200? Using the Rule of 72, divide 72 by 5 and get 14.4. It would take about 14 years for the chair's worth to double.
1. Calculate the values below using the Rule of 72.
a. If you bought a house for $150,000 and the annual inflation rate was 4 percent, how long would it take before the house, under good maintenance, would be worth $300,000?
b. If you bought a Picasso painting at last week's auction for $200,000 and the annual inflation rate is 10 percent, how long would it take to double your money?
c. If you went to the car show and bought a 1965 Mustang in mint condition for $25,000 and the annual inflation rate was 8 percent, when would your investment double?
d. If your grandmother gave you her wedding ring, it was appraised at $1,200, and the annual inflation rate was 6 percent, how many years would it be before it was worth $2,400?
e. If you bought an antique lamp for $3,000 and the inflation rate was 3 percent, how many years would it be before your investment doubled in value?
2. Reflect on how inflation, recession and depression affects you? Your family? The general population? Explain your thoughts in a short paragraph (5-7 sentences).
3. Who are the winners in times of high inflation? In times of recession? In times of depression? Provide specific examples to support your answer.
4. Who are the losers in times of high inflation? In times of recession? In times of depression? Provide specific examples to support your answer.
5. What can be done to minimize effects of difficult times due to high inflation, recession and/or depression? Provide specific examples to support your answer.
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What can be done to minimize effects of difficult times due to high inflation, recession and/or depression? Provide specific examples to support your answer.
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