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FutureStarrWhat Is 8 Percent in Money OR
8% of Monthly Revenue?
The use of paper money really caught on in Europe in the 1700s, when the official bank of the French government began issuing paper money. The idea came from goldsmiths, who often gave people bills of receipt for their gold. The bills could be exchanged for the gold at a later date. That's an important fact in the development of paper money, because it means that the money represented a real amount of gold or silver that actually existed somewhere. A piece of money was actually a promise from the institution that issued it (either a government or a bank) that the institution would give the holder of the bill a certain amount of gold or silver from its stockpile whenever he wanted it. Under this kind of system, the money is said to be "backed by gold." With a few temporary exceptions, during wars or other emergencies, all currency in the world was backed by a real supply of precious metal until 1971. Since money is really just a representation of value, it didn't take long for people to realize they could just send information about money by telegraph or other electronic means, and it was just as "real" as sending the money itself. After World War II, banks would record information about the day's transactions onto large magnetic reels, which were taken to the regional Federal Reserve Bank. This system eliminated the need for the large denominations that were printed prior to the war to facilitate these large-scale transfers. Today, the $500, $1,000, $5,000, and $10,000 bills printed during this period are very rare, though some are still in circulation.
An important effect of coins was that governments now controlled the release of money into the market. They could also manipulate the money supply. This was done by various Roman emperors, who would reduce the precious metal content of Roman coins when they needed money. They figured that if a ton of gold made 10,000 gold coins, they could have twice as many coins by cutting the gold content in half. Instead of making the emperors richer, the constant devaluation of Roman coins -- and the resulting instability of the Roman economy -- is one of the factors that led to the fall of the Roman Empire. Currency, or money (we'll use the terms interchangeably for the purposes of this discussion), can be defined as a unit of purchasing power. It is a medium of exchange, a substitute for goods or services. It doesn't have to be the coins or bills with which you're probably most familiar. In fact, through the ages, everything from large stone wheels, knives, slabs of salt, and even human beings have been used as money. Anything that people agree represents value is currency. (Source: money.howstuffworks.com)
100 is what percent of 80? These problems tend to kill people because on some level they're kind of simple, they're just 100 and an 80 there, and they're asking what percent. But then people get confused. They say, do I divide the 100 by the 80? The 80 by 100? Or is it something else going on? And you really just have to think through what the language is saying. They're saying that this value right here, this 100, is some percentage of 80, and that some percentage is what we have to figure out. What percent? So if we multiply 80 by this what percent, we will get 100. So let's view it this way. We have 80. If we multiply it by something, let's call this something x. Let me do that in a different color. If we multiply 80 by something, we are going to get 100. And we need to figure out what we need to multiply 80 by to get 100. And if we just solve this equation as it is, we're going to get a value for x. And what we need to do is then convert it to a percent. Another way you could have viewed this is 100 is what you get when you multiply what by 80? And then you would have gotten this number, and then you could convert it to a percent. So this is essentially the equation and now we can solve it. If we divide both sides of this equation by 80, so you divide the left-hand side by 80, the right-hand side by 80, you get x. x is equal to 100/80. They both share a common factor of 20, so 100 divided by 20 is 5, and 80 divided by 20 is 4. So in simplest form, x is equal to 5/4, but I've only expressed it as a fraction. But they want to know what percent of 80. If they just said 100 is what fraction of 80, we would be done. We could say 100 is 5/4 of 80, and we would be absolutely correct. But they want to say what percent? So we have to convert this to a percent, and the easiest thing to do is to first convert it into a decimal, so let's do that. 5/4 is literally the same thing as 5 divided by 4, so let's figure out what that is. Let me do it in magenta. So 5 divided by 4. You want to have all the decimals there, so let's put some zeroes out here. 4 goes into 5 one time. Let me switch up the colors. 1 times 4 is 4. You subtract. You get 5 minus 4 is 1. Bring down the next zero. And of course, the decimal is sitting right here, so we want to put it right over there. So you bring down the next zero. 4 goes into 10 two times. 2 times 4 is 8. You subtract. 10 minus 8 is 2. Bring down the next zero. 4 goes into 20 five times. 5 times 4 is 20. Subtract. No remainder. So this is equal to 1.25. 5/4 is the same thing as 5 divided by 4, which is equal to 1.25. So far, we could say, 100 is 1.25 times 80, or 1.25 of 80, you could even say, But we still haven't expressed it as a percentage. This is really just as a number. I guess you could call it a decimal, but it's a whole number and a decimal. It would be a mixed number if we didn't do it as a decimal. It's 1 and 1/4, or 1 and 25 hundredths, however you want to read it. So to write it as a percent, you literally just have to multiply this times 100, or shift the decimal over twice. So this is going to be equal to, as a percent, if you just shift the decimal over twice, this is equal to 125%. And that makes complete sense. 100 is 125% of 80. 80 is 100% of 80. 100% percent is more than 80. It's actually 1 and 1/4 of 80, and you see that right over there, so it makes sense. It's 125%. It's more than 100%. But we are done. We've solved the problem. It is a 125% of 80.
In Problem 1 we let x represent the unknown quantity "what percent"; in Problem 2 we let x represent the unknown quantity "of what number"; and in Problem 3 we let x represent the unknown quantity "What is." Thus, we solved three different percent problems, where in each problem, two numbers were given and we were asked to find the third. We did this by letting a variable represent the unknown quantity and then substituting the given values into a proportion to solve for the unknown quantity. Finally, what if you need to know the percentage change (increase or decrease) between amount or size "X" and "Y"? An item you have been thinking of purchasing had cost $249.95 and now costs $199.95. The ratio is 249.95:199.95. What is the percent the price dropped? (We would ask what is the "discount?") We can easily flip the calculation on its head. Suppose the price had been $199.95 and is now $249.95 (199.95:249.95), what is the percent increase? Use Percentage Calculator 4 (Source: financial-calculators.com)