(a) In summer 1970, the pump price of gasoline was about $0.35(gal)-1. Between 1970 and 2000, the average rate of inflation was about per year. What might be the expected pump price in summer 2000? What conclusion might one reach from this calculation?€ƒ
(b) A Ph.D. engineer stilting his career in 1970 at a salary of $16.000(yr)-1.retired in 2000 at a salary of $80,000(yr)-1. How well did his salary keep up with an inflation rate of 591 per year?
(c) Tuition increases at major private universities in the Untied Slates have led inflation rates by about per year. Use this observation to suggest strategies for paying the future tuition for a child at a private university, Assume no financial aid, an annual inflation rate of 5% per year, and a current tuition of $25,000(yr)-1
Recall the compound interest formula:

Where C can be cost, salary, etc., t1 and t2 indicate tunes, and i is a rate inflation, interest. ete.) expressed as a decimal.

Transcribed Image Text:

C(t2) Citi) (1+i)