Question 1

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

To find out how much $10 in 1972 is worth today, we need to adjust it for inflation. We can do this by dividing the current CPI by the CPI in 1972 and then multiplying this by $10.

(324/127) x $10 = $25.51

Therefore, $10 in 1972 had the same buying power as $25.51 today, and the best choice is B.

Question 2

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

The answer of If the CPI was 68 in 1965...

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

The answer of The CPI was 96 in 1982, and...

Question 4

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 5

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.

The inflation rate from 1994 to 2010 is: (215.3-148.2)/148.2 = 0.4529 or 45.29%.

To adjust David's 1994 salary for inflation, we multiply by the inflation rate:

43,500 * 1.4529 = 63,195.34

Therefore, David's 1994 salary in 2010 dollars is $63,195.34. The correct answer is choice C.

Question 6

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

The answer of If the CPI was 90 in 1975...

Question 7

Henri earned a salary of $50,000 in 2001 and $60,000 in 2012. The consumer price index was 177 in 2001 and 225 in 2012. Henri's 2001 salary in 2012 dollars is

Accepted Answer

To calculate the 2001 salary in 2012 dollars, we need to adjust it for inflation using the consumer price index (CPI). The formula for adjusting for inflation is:

Adjusted salary = (Nominal salary / CPI in the year of the nominal salary) x CPI in the year of the adjusted salary

Plugging in the numbers we get:

Adjusted salary = ($50,000 / 177) x 225 = $63,559.32

Therefore, the 2001 salary in 2012 dollars is $63,559.32. The correct choice is D.

Question 8

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

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Question 9

Scenario 24-1
The price tag on a tennis ball in 1975 read $0.10, and the price tag on a tennis ball in 2005 read $1.00. The CPI in 1975 was 52.3, and the CPI in 2005 was 191.3.
-Refer to Scenario 24-1. The price of a 1975 tennis ball in 2005 dollars is

Accepted Answer

To find the price of a 1975 tennis ball in 2005 dollars, we need to adjust the 1975 price to account for inflation. We can use the CPI to do this by calculating the inflation rate between 1975 and 2005:
inflation rate = (CPI in 2005 - CPI in 1975) / CPI in 1975
= (191.3 - 52.3) / 52.3
= 2.657
This means that prices increased by 2.657 times between 1975 and 2005 due to inflation. To find the 2005 price of a 1975 tennis ball, we can multiply the 1975 price by this inflation factor:
2005 price = 1975 price * inflation factor
= $0.10 * 2.657
= $0.2657
Rounding to the nearest cent, the price of a 1975 tennis ball in 2005 dollars is $0.37, which corresponds to choice C.

Question 10

Henri earned a salary of $50,000 in 2001 and $70,000 in 2006. The consumer price index was 177 in 2001 and 265.5 in 2006. Henri's 2006 salary in 2001 dollars is

Accepted Answer

Use the formula: 
Real Value = (Nominal Value / CPI) x 100

For Henri's 2001 salary in 2006 dollars:
Real Value = (50000/177) x 265.5 = $70,746.89

For Henri's 2006 salary in 2001 dollars:
Real Value = (70000/265.5) x 177 = $46,666.67

Therefore, the answer is B.

Question 11

Scenario 24-2
The price tag on a golf ball in 1975 read $0.20, and the price tag on a golf ball in 2005 read $2.00. The CPI in 1975 was 52.3, and the CPI in 2005 was 191.3.
-Refer to Scenario 24-2. In 1975 dollars, a 1975 golf ball cost $0.20 and a 2005 golf ball cost

Accepted Answer

To adjust the price of a 2005 golf ball to 1975 dollars, we need to use the CPI ratios. The CPI ratio in 2005/1975 is 191.3/52.3 = 3.655. Therefore, in 1975 dollars, the price of a 2005 golf ball would be $2.00/3.655 = $0.55, which is less than the price of a 1975 golf ball ($0.20). Therefore, golf balls were cheaper in 1975.

Question 12

In 1949, Sycamore, Illinois built a hospital for about $500,000. In 1987, the county restored the courthouse for about $1.7 million. A price index for nonresidential construction was 24 in 1949, 108 in 1987, and 126.5 in 2000. According to these numbers, the hospital cost about

Accepted Answer

To find the cost of the hospital in 2000 dollars, we need to multiply its original cost in 1949 by the ratio of the price index in 2000 to the price index in 1949:
$500,000 x (126.5/24) = $2,625,000
Therefore, the hospital cost $2.6 million in 2000 dollars, which is more than the cost of the courthouse restoration in 2000 dollars ($1.7 million). So, the answer is D.

Question 13

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 answer of If the CPI was 108.00 in 1942...

Question 14

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.

Question 15

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

The answer of In 1969, Malcolm bought a Pontiac Firebird...

Question 16

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 is 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 historical dollars x (current CPI / historical CPI)

Plugging in the numbers, we get: 
value in today's dollars = $10 x (390 / 104) = $37.50

Therefore, $10 in 1967 is equivalent to $37.50 in today's dollars, and choice B is the best answer.

Question 17

Scenario 24-1
The price tag on a tennis ball in 1975 read $0.10, and the price tag on a tennis ball in 2005 read $1.00. The CPI in 1975 was 52.3, and the CPI in 2005 was 191.3.
-Refer to Scenario 24-1. In 1975 dollars, a 1975 tennis ball cost $0.10 and a 2005 tennis ball cost

Accepted Answer

To find the cost of a 1975 tennis ball in 2005 dollars, we need to adjust for inflation using the CPI. We can use the following formula:
(cost in year 2 dollars) = (cost in year 1 dollars) x (CPI in year 2) / (CPI in year 1)

Plugging in the given values, we get:
(cost in 2005 dollars) = ($0.10) x (191.3) / (52.3) = $0.37

Therefore, a 1975 tennis ball would cost $0.37 in 2005 dollars. Since a 2005 tennis ball actually costs $1.00, a tennis ball was cheaper in 1975, and the answer is A.

Question 18

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...

Question 19

Scenario 24-2
The price tag on a golf ball in 1975 read $0.20, and the price tag on a golf ball in 2005 read $2.00. The CPI in 1975 was 52.3, and the CPI in 2005 was 191.3.
-Refer to Scenario 24-2. The price of a 1975 golf ball in 2005 dollars is

Accepted Answer

To find the price of a 1975 golf ball in 2005 dollars, we need to adjust the 1975 price for inflation. We can do this by multiplying the 1975 price by the ratio of the 2005 CPI to the 1975 CPI:

$0.20 x (191.3/52.3) = $0.73

So the price of a 1975 golf ball in 2005 dollars is $0.73, which is answer choice C.

Question 20

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

The answer of In 1986, Ken bought a Ford Mustang...

Quiz 6: Measuring the Cost of Living