This lesson is designed to help students understand the concept of inflation. The concept known as inflation is a decrease in the value of purchasing power. For example, if you want to buy something for a dollar today, it will cost you more the following year. Inflation results in higher prices, making goods and services potentially more expensive and less affordable.

Let's say you see a leather jacket for $100 at a clothing store, and the inflation rate is 5%. In one year you will need an extra $5.00 to buy the same jacket, or $105 in total. Therefore, inflation caused the $100 leather jacket to be more expensive in a year.

In summary:

  Price Today Inflation Rate Price Increase Future Price
  $100.00 5% $5.00 $105.00

What is the future price of each of the following? Round each calculation to the nearest penny.

  Price Today Inflation Rate Price Increase Future Price
1. $100.00 4% $4.00 $ _____              
2. $50.00 8% $4.00 $ _____              
3. $190.00 2% $3.80 $ _____              
4. $170.00 10% $17.00 $ _____              
5. $180.00 6% $10.80 $ _____              
6. $420.00 9% $37.80 $ _____              
7. $350.00 6% $21.00 $ _____              
8. $540.00 1% $5.40 $ _____              
9. $30.00 5% $1.50 $ _____              
10. $790.00 2% $15.80 $ _____              

Answers

  Price Today Inflation Rate Price Increase Future Price
1. $100.00 4% $4.00 $104.00
2. $50.00 8% $4.00 $54
3. $190.00 2% $3.80 $193.80
4. $170.00 10% $17.00 $187.00
5. $180.00 6% $10.80 $190.80
6. $420.00 9% $37.80 $457.80
7. $350.00 6% $21.00 $371.00
8. $540.00 1% $5.40 $545.40
9. $30.00 5% $1.50 $31.50
10. $790.00 2% $15.80 $805.80