document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1139393>Question 1139393</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Does anyone know how to answer this question? I do not understand it. Thank you.\r<BR>\n" );
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document.write( "If prices increase 2% each year for 10 years, then a jacket that costs $90 today will cost $109.71 in 10 years. What is the percentage decrease in the buying power of currency over the 10-year period?  </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #759873 by </B><A HREF=/tutors/aboutme.mpl?userid=greenestamps><B>greenestamps(13198)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=greenestamps><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=greenestamps><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=759873\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> <br><BR>\n" );
document.write( "The solution by tutor MathLover1 is not correct.<br><BR>\n" );
document.write( "After finding that the percent increase in price is 21.9%, she incorrectly states<br><BR>\n" );
document.write( "\"=> percent increase in price= percent decrease in the buying power of currency\"<br><BR>\n" );
document.write( "which is not correct.  As a simple way to see this, suppose the price was doubled, making the increase in price 100%.  Would your buying power be decreased by 100%?<br><BR>\n" );
document.write( "Of course not.  If the price has doubled, your buying power has decreased by 50%, not 100%.<br><BR>\n" );
document.write( "So if you are going to solve the problem the way she started, you need to say your buying power has been reduced by a factor of 100/121.9 = 0.8203.  So the decrease in your buying power is 1-0.8203, which converted to a percentage is 17.97%.<br><BR>\n" );
document.write( "ANSWER: The percentage decrease in buying power over the ten years is 17.97%. </SPAN>\n" );
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