Table 24-2.Olivia's expenditures on clothing for three consecutive years,along with some values for the CPI,are presented in the table below.

-Refer to Table 24-2.To the nearest dollar,how much is Olivia's 2010 clothing expenditure in 2011 dollars?

Question

Table 24-2.Olivia's expenditures on clothing for three consecutive years,along with some values for the CPI,are presented in the table below.
 
-Refer to Table 24-2.To the nearest dollar,how much is Olivia's 2010 clothing expenditure in 2011 dollars?

Quizplus · Accepted Answer

To adjust for inflation, we need to use the CPI. We can use the formula:

Adjusted Expenditure = (Nominal Expenditure / CPI in Nominal Year) x CPI in Base Year

For Olivia's 2010 clothing expenditure in 2011 dollars, we need to use the CPI for 2011 (which is the base year in the table) and the CPI for 2010 (which is the nominal year for the expenditure).

Adjusted Expenditure = (2,400 / 218.1) x 224.9
Adjusted Expenditure = 10.999 x 224.9
Adjusted Expenditure ≈ 1,778

Therefore, Olivia's 2010 clothing expenditure in 2011 dollars is approximately $1,778. The best choice is B.