When Anders took out his first two-year membership with Maxima Gym in 2004, the fee was $540

Economics Sep 06, 2020

When Anders took out his first two-year membership with Maxima Gym in 2004, the fee was $540.00. He renewed his membership three times; in 2006 for $580.00, in 2008, for $600.00, and again in 2010, for $630.00. What is the overall rate of inflation for Anders' gym membership?

Expert Solution

Computation of the overall rate of inflation for Anders' gym membership:-

Overall inflation rate = (Price in 2010 - Base price in 2004) / Base price in 2004

= ($630 - $540) / $540

= $90 / $540

= 16.67%

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