36. The economy has an annual inflation rate of 3.5 percent. It will take approximately how many years for the price level to double?

A. 10 years
B. 20 years
C. 25 years
D. 30 years

Question

36. The economy has an annual inflation rate of 3.5 percent. It will take approximately how many years for the price level to double?

A. 10 years
B. 20 years
C. 25 years
D. 30 years

BlackTom AI · Accepted Answer

This question asks how long it takes for the price level to double at an annual inflation rate of 3.5%. 
Option A: 10 years. If doubling occurred in 10 years, the implied annual growth rate would be about 70% over 10 years, roughly 7% per year, which is far higher than 3.5%. So this is inconsistent with the given rate. 
Option B: 20 years. The common quick rule, the Rule of 70, estimates doubling time as 70 divided by the annual growth rate. 70 / 3.5 = 20, so about 20 years. This aligns with the given 3.5% inflation. 
Option C: 25 years. Doubling in 25 years corresponds to an annual growth rate of roughly 70 / 25 = 2.8%. That’s lower than 3.5%, so this would not match the stated rate. 
Option D: 30 years. Doubling in 30 years implies an approximate rate of 70 / 30 ≈ 2.33% per year, again not matching the 3.5% figure. 
In summary, only the 20-year estimate (Option B) corresponds to the given inflation rate when applying the standard doubling-time intuition.

36. The economy has an annual inflation rate of 3.5 percent. It will take approximately how many years for the price level to double? A. 10 years B. 20 years C. 25 years D. 30 years Single choice

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