You made $3000 on a part-time job last year. If you expect to make the same amount this year, and the inflation rate is three percent, what is your purchasing power?

1 Answer
Aug 12, 2018

Answer:

New spending power is 97.087% of this year
(to 3 decimal places)

Explanation:

Assumption: The inflation rate of 3% is applied to the cost of everything (not so in real life).

So the change is:

#$x larr" Last year's cost"#

This years cost:

#$x+$(3/100xx x) = $x(1+3/100)=$x(103/100)#

#$3000(103/100) = $3090#

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Thus the new #ul("'spending power'")# is #($3000)/($3090)# of this year

Expressing this as a percentage of last years 'spending power' we have:

#(cancel($)3000)/(cancel($)3090)xx100% = 97.087378...%#

New spending power is: 97.087% to 3 decimal places