
To find: Inflation is a term used to describe the erosion of the purchasing power of money. For example, if the annual inflation rate is , then worth of purchasing power now will have only worth of purchasing power in 1 year because of the original has been eroded due to inflation. In general, if the rate of inflation averages per annum over years, the amount that will purchase after years is where is expressed as a decimal. Inflation If the amount that will purchase is only after 2 years, what was the average inflation rate?

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