SOLUTION: From 1929 through the early 1930s, the prices of consumer goods actually decreased. Economists call this phenomenon deflation. The rate of deflation during this period was about 7%

Question 1168375: From 1929 through the early 1930s, the prices of consumer goods actually decreased. Economists call this phenomenon deflation. The rate of deflation during this period was about 7% per year, meaning that prices decreased by 7% per year. To get a sense of what this rate would mean in the long run, let's suppose that this rate of deflation persisted over a period of 20 years.
What would be the cost after 20 years of an item that costs $400 initially? (Round your answer to the nearest cent.)
Answer by Boreal(15235) (Show Source): You can put this solution on YOUR website!
This is 400(1-0.07)^20
400*0.93^20=$93.70
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