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The U.S. government reports the rate of inflation (as measured by the Consumer Price Index)
both monthly and annually. Suppose that, for a particular month, the monthly rate of inflation is
reported at 0.8%. Assuming that this rate remains constant, what is the corresponding annual rate
of inflation?
Solution
(1.008)^12 -1 = 10.003%

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The U.S. government reports the rate of inflation (as measured by th.pdf

  • 1. The U.S. government reports the rate of inflation (as measured by the Consumer Price Index) both monthly and annually. Suppose that, for a particular month, the monthly rate of inflation is reported at 0.8%. Assuming that this rate remains constant, what is the corresponding annual rate of inflation? Solution (1.008)^12 -1 = 10.003%