The price of a house in Year 1 was $50,000.If the Consumer Price Index is 101 for Year 1 and 202 for Year 2,the value of the house in Year 2 is ________.
A) $55,000
B) $100,000
C) $150,000
D) $75,000

Question

Quizplus · Accepted Answer

To adjust for inflation, we need to use the formula: 
Value in Year 2 = Value in Year 1 x (CPI in Year 2 / CPI in Year 1)
Value in Year 2 = $50,000 x (202/101)
Value in Year 2 = $100,000
Therefore, the value of the house in Year 2 is $100,000.

The Price of a House in Year 1 Was $50,000