Question 1

If the CPI was 90 in 1975 and is 225 today,then $100 today purchases the same amount of goods and services as

Accepted Answer

C

Question 2

If the CPI was 95 in 1955 and is 475 today,then $100 today purchases the same amount of goods and services as

Accepted Answer

The Consumer Price Index (CPI) measures the average change in prices over time. To find the equivalent purchasing power of $100 today in 1955, use the ratio of the CPIs: (95/475) * $100 = $20.00.

Question 3

The CPI was 96 in 1982,and the CPI was 230 in 2012.How much money would you have needed in 2012 in order to buy what you could have bought with $500 in 1982?

Accepted Answer

To find out how much money you would need in 2012 to buy what you could with $500 in 1982, use the formula: (CPI in 2012 / CPI in 1982) * 1982 amount. This is (230 / 96) * 500 = $1,197.92.

Question 4

You know that a candy bar cost five cents in 1962.You also know the CPI for 1962 and the CPI for today.Which of the following would you use to compute the price of the candy bar in today's prices?

Accepted Answer

To compute the price of the candy bar in today's prices, we need to adjust the price using inflation. We can do this by dividing the current CPI by the CPI of 1962, which gives us the inflation factor. Then, we can multiply the original price (5 cents) by this factor to get the price in today's dollars. Therefore, option C (today's CPI / 1962 CPI) is the correct choice.

Question 5

You know that a candy bar costs sixty cents today.You also know the CPI for 1962 and the CPI for today.Which of the following would you use to compute the price of the candy bar in 1962 prices?

Accepted Answer

To compute the price of the candy bar in 1962 prices, we need to adjust for inflation by using the ratio of the CPI for 1962 to the CPI for today. Therefore, we should divide the current CPI by the 1962 CPI to get a conversion factor. Option D is the only choice that involves dividing the 1962 CPI by today's CPI, so it is the best choice.

Question 6

Babe Ruth's 1931 salary was $80,000.Government statistics show a consumer price index of 15.2 for 1931 and 237 for 2015.Ruth's 1931 salary was equivalent to a 2015 salary of about

Accepted Answer

To adjust a salary from one year to another, we need to use the formula:
Adjusted salary = (original salary) x (new CPI) / (old CPI)
Using the given values, we get:
Adjusted salary in 2015 = $80,000 x 237 / 15.2 = $1,247,368.42 (rounded to the nearest dollar)
Therefore, the closest answer choice is C.

Question 7

If the CPI was 108.00 in 1942 and is 336.96 today,then $10 in 1942 purchased the same amount of goods and services as

Accepted Answer

The CPI is a measure of the price level of goods and services purchased by consumers. It is calculated by taking the average price of a basket of goods and services in a given year and dividing it by the average price of the same basket of goods and services in a base year. The resulting number is multiplied by 100 to create the CPI index.In this case, the CPI was 108.00 in 1942 and is 336.96 today. This means that the price level of goods and services has increased by a factor of 336.96/108.00 = 3.1209 since 1942.Therefore, $10 in 1942 would purchase the same amount of goods and services as $10 x 3.1209 = $31.20 purchases today.

Question 8

In 1969,Malcolm bought a Pontiac Firebird for $2,500.If the price index was 36.7 in 1969 and the price index was 235 in 2013,then what is the price of the Firebird in 2013 dollars?

Accepted Answer

To adjust for inflation, use the formula: (Price in 1969) * (Price Index in 2013 / Price Index in 1969) = Price in 2013 dollars. So, $2,500 * (235 / 36.7) = $16,008.17.

Question 9

If the CPI was 104 in 1967 and is 390 today,then $10 in 1967 purchased the same amount of goods and services as

Accepted Answer

To find out how much $10 in 1967 would be worth today, we need to adjust it for inflation using the CPI. We can use the following formula:

Value in Today's Dollars = Value in Base Year Dollars x (CPI Today / CPI in Base Year)

Substituting the values we have:

Value in Today's Dollars = $10 x (390 / 104) = $37.50

Therefore, $10 in 1967 would be worth $37.50 in today's dollars. So, the correct choice is B.

Question 10

If the CPI was 127 in 1972 and is 324 today,then $10 in 1972 purchased the same amount of goods and services as

Accepted Answer

We need to use the formula of inflation rate:
Inflation rate = (CPI in year 2 - CPI in year 1) / CPI in year 1 x 100%

Using this formula, we can find the inflation rate between 1972 and today:

Inflation rate = (324 - 127) / 127 x 100% = 155.12%

This means that prices have increased by 155.12% since 1972.

To find out how much $10 in 1972 is worth today, we need to adjust for inflation. We can do this by multiplying $10 by the inflation rate and adding the result to $10:

$10 + ($10 x 155.12%) = $10 + $15.51 = $25.51

Therefore, $10 in 1972 is worth $25.51 today, which means that $25.51 purchases the same amount of goods and services as $10 did in 1972.

Question 11

In 1931,President Herbert Hoover was paid a salary of $75,000.Government statistics show a consumer price index of 15.2 for 1931 and 237 for 2015.President Hoover's 1931 salary was equivalent to a 2015 salary of about

Accepted Answer

The answer of In 1931,President Herbert Hoover was paid a...

Question 12

The CPI was 172 in 2007,and the CPI was 46.5 in 1982.If your parents put aside $1,000 for you in 1982,then how much would you have needed in 2007 in order to buy what you could have bought with the $1,000 in 1982?

Accepted Answer

The answer of The CPI was 172 in 2007,and the...

Question 13

When we express Babe Ruth's 1931 salary in today's dollars and compare his salary to those of current New York Yankee players,we find that the current median salary of today's Yankees is

Accepted Answer

According to inflation calculators, Babe Ruth's 1931 salary of $80,000 is equivalent to approximately $1.3 million today. The current median salary of the New York Yankees is around $4 million. Therefore, the current median salary is more than 4 times Ruth's salary.

Question 14

Ethel purchased a bag of groceries in 1970 for $8.She purchased the same bag of groceries in 2006 for $25.If the price index was 38.8 in 1970 and the price index was 180 in 2006,then what is the price of the 1970 bag of groceries in 2006 dollars?

Accepted Answer

The answer of Ethel purchased a bag of groceries in...

Question 15

The primary purpose of measuring the overall level of prices in the economy is to

Accepted Answer

Measuring the overall level of prices in the economy allows for the comparison of dollar figures from different points in time using a common unit of measurement. This is important for analyzing economic trends and changes over time, such as inflation or deflation. It is not primarily used for measuring GDP or for consumers to know what kinds of prices to expect in the future.

Question 16

If the CPI was 68 in 1965 and is 285 today,then $100 today purchases the same amount of goods and services as

Accepted Answer

CPI measures the change in the price level of goods and services over time. A higher CPI indicates a higher price level, meaning that the same amount of goods and services will cost more. In this case, the CPI has increased from 68 in 1965 to 285 today. This means that the price level has increased by a factor of 285/68 = 4.19. Therefore, $100 today will purchase the same amount of goods and services as $100/4.19 = $23.86 purchased in 1965.

Question 17

In 1931 the price of a movie ticket was $0.25.The consumer price index was 15.2 in 1931,and 210 in 2008.Using 2008 prices,the real price of a movie in 1931 was

Accepted Answer

To find the real price in 2008 dollars, use the formula: Real Price = (CPI in 2008 / CPI in 1931) * Price in 1931. So, (210 / 15.2) * $0.25 = $3.45.

Question 18

David earned a salary of $43,500 in 1994 and $89,000 in 2010.The consumer price index was 148.2 in 1994 and 215.3 in 2010.David's 1994 salary in 2010 dollars is

Accepted Answer

To find David's 1994 salary in 2010 dollars, we need to adjust for inflation using the consumer price index.

First, we find the inflation rate between 1994 and 2010:
Inflation rate = (CPI in 2010 - CPI in 1994) / CPI in 1994
Inflation rate = (215.3 - 148.2) / 148.2
Inflation rate = 0.4527 or 45.27%

Next, we adjust David's 1994 salary for inflation by multiplying it by the inflation rate and adding it to the original salary:
Adjusted salary = 43,500 × (1 + 0.4527) = $63,195.34

Therefore, the best choice is C.

Question 19

In 1986,Ken bought a Ford Mustang for $8,000.If the price index was 122 in 1986 and the price index was 280 in 2011,then what is the price of the Mustang in 2011 dollars?

Accepted Answer

To adjust for inflation, use the formula: (Price in past dollars) * (Price index in future year / Price index in past year). So, $8,000 * (280 / 122) = $18,360.66.

Question 20

In 1949,Sycamore,Illinois built a hospital for about $500,000.In 1987,the county restored the courthouse for about $2.4 million.A price index for nonresidential construction was 14 in 1949,92 in 1987,and 114.5 in 2000.According to these numbers,the hospital cost about

Accepted Answer

To calculate the inflation-adjusted cost of the hospital in 2000 dollars, we need to use the price index for each year to convert the original cost to its equivalent value in 2000.

The hospital was built in 1949, so we need to adjust for inflation from 1949 to 2000 using the price index for those years:

(114.5/14) * $500,000 = $4,104,286

So the hospital cost about $4.1 million in 2000 dollars.

This is more than the cost of the courthouse restoration in 2000 dollars, which was $2.4 million. Therefore, the answer is D.

Quiz 11: Measuring the Cost of Living: Correcting Economic Variables for the Effects of Inflation