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The calculation of inflation rate and currency depreciation rate Is the rate of inflation the same as the rate of currency depreciation Last time I saw two questions in the political reference book, which involved these two concepts, but the algorithm was very different The current price of goods is 10 yuan. (1) Q: what's the price when the inflation rate is 20% Calculation: 10x (1 + 20%) = 12 (yuan) (2) What is the price when the devaluation rate is 20%? Calculation: 10 divided by (1 + 20%) equals 12.5 yuan Which is the right one? Or is that the way it is calculated I just don't understand why some use multiplication and some use division
The rate of inflation is different from the rate of currency depreciation
The inflation rate is the decline of the internal value of the domestic currency;
The devaluation rate is the decline of the external value of the domestic currency;
The first one is right;
The second condition is insufficient. If the local currency depreciates by 20%, the price of foreign imports will rise. The increase may be: 10 divided by (1-20%) equals 12.5 yuan
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