the following table shows the average price per ounce of gold in the given year.\nyear 1980 1990 2000 2010…

the following table shows the average price per ounce of gold in the given year.\nyear 1980 1990 2000 2010 2020\nprice per ounce $568.97 $357.16 $309.96 $1173.40 $1679.28\ninflation rates are shown in the following table:\ntime span 1980 - 2020 1990 - 2020 2000 - 2020 2010 - 2020\ninflation 214% 98% 50% 19%\ncalculate the price per ounce of gold in constant 2020 dollars.\n(use decimal notation. give your answer to two decimal places.)\nprice per ounce in 1980 in 2020 dollars: $1786.57\nprice per ounce in 1990 in 2020 dollars: $

the following table shows the average price per ounce of gold in the given year.\nyear 1980 1990 2000 2010 2020\nprice per ounce $568.97 $357.16 $309.96 $1173.40 $1679.28\ninflation rates are shown in the following table:\ntime span 1980 - 2020 1990 - 2020 2000 - 2020 2010 - 2020\ninflation 214% 98% 50% 19%\ncalculate the price per ounce of gold in constant 2020 dollars.\n(use decimal notation. give your answer to two decimal places.)\nprice per ounce in 1980 in 2020 dollars: $1786.57\nprice per ounce in 1990 in 2020 dollars: $

Answer

Explanation:

Step1: Recall inflation - adjustment formula

The formula to adjust a price from an earlier year to a later - year price is $P_{later}=P_{earlier}(1 + r)$, where $P_{earlier}$ is the price in the earlier year, $r$ is the inflation rate, and $P_{later}$ is the price in the later year.

Step2: Calculate the 1990 price in 2020 dollars

We know that the price per ounce of gold in 1990 is $P_{1990}=$357.16$ and the inflation rate from 1990 to 2020 is $r = 0.98$. Using the formula $P_{2020}=P_{1990}(1 + r)$, we substitute the values: $P_{2020}=357.16\times(1 + 0.98)$. $P_{2020}=357.16\times1.98$. $P_{2020}=357.16\times(2-0.02)=357.16\times2-357.16\times0.02$. $357.16\times2 = 714.32$ and $357.16\times0.02=7.1432$. $P_{2020}=714.32-7.1432 = 707.18$.

Answer:

$707.18$