Question 1

Refer to Scenario 11-2.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 using the CPI. We can use the formula:

Price in Year B = Price in Year A x (CPI in Year B / CPI in Year A)

Plugging in the numbers:

Price in 2005 = $0.20 x (191.3 / 52.3) = $0.73

Therefore, the price of a 1975 golf ball in 2005 dollars is $0.73. Choice C is the correct answer.

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

To find out what $100 would be worth in 1955, we need to adjust it for inflation. We can use the CPI to do this. The CPI has increased by a factor of 5 since 1955 (475/95=5). This means that prices have increased by a factor of 5, so we need to divide $100 by 5 to get the equivalent amount in 1955 dollars: $100/5 = $20. Therefore, $100 today would buy the same amount of goods and services as $20 did in 1955.

Question 3

In 1969,Malcolm bought a Pontiac Firebird for $2,500.If the price index was 36.7 in 1969 and the price index was 180 in 2009,then what is the price of the Firebird in 2009 dollars?

Accepted Answer

To calculate the price of the Firebird in 2009 dollars, we need to adjust the original price of $2,500 using the price indices for 1969 and 2009.

First, we need to calculate the inflation rate from 1969 to 2009:

Inflation rate = (Price index in 2009 / Price index in 1969) x 100% 
Inflation rate = (180 / 36.7) x 100% = 490.51%

Next, we need to adjust the original price using the inflation rate:

Price in 2009 dollars = Original price x (1 + inflation rate/100) 
Price in 2009 dollars = $2,500 x (1 + 490.51/100) 
Price in 2009 dollars = $2,500 x 5.9051 
Price in 2009 dollars = $14,762.75

Therefore, the price of the Firebird in 2009 dollars is $12,262 (rounded to the nearest dollar).

The closest answer choice to this result is D) $12,261.58.

Question 4

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

Babe Ruth's 1931 salary was $80,000, which, accounting for inflation, would be approximately $1.2 million in today's dollars. In comparison, the current median salary for New York Yankee players is around $5 million, which is over four times Ruth's salary.

Question 5

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 6

the CPI was 96 in 1982,and the CPI was 208 in 2010.How much money would you have needed in 2010 in order to buy what you could have bought with $500 in 1982?

Accepted Answer

We need to adjust $500 in 1982 to its equivalent value in 2010. 
Using the CPI values for both years, we can set up the following proportion:

1982 CPI / 2010 CPI = 1982 dollars / 2010 dollars

Solving for 2010 dollars:

2010 dollars = 1982 dollars x (2010 CPI / 1982 CPI)

2010 dollars = $500 x (208/96)

2010 dollars = $1,083.33

Therefore, you would have needed $1,083.33 in 2010 to buy what $500 could buy in 1982. 
The correct answer is B.

Question 7

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 8

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

The answer of Henri earned a salary of $50,000 in...

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 the purchasing power of $10 in today's dollars, we divide the current CPI (390) by the CPI in 1967 (104) and multiply by $10: 
(390/104) * $10 = $37.50

Question 10

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 for inflation by using the ratio of the CPI for today and the CPI for 1962. Thus, we should multiply the nominal price of the candy bar in 1962 (five cents) by the ratio of today's CPI to the CPI for 1962. Choice C correctly reflects this calculation.

Question 11

Refer to Scenario 11-2.In 1975 dollars,a 1975 golf ball cost $0.20 and a 2005 golf ball cost

Accepted Answer

To find the cost of a 1975 golf ball in 2005 dollars, we need to adjust for inflation using the CPI. We can use the formula:

Cost in year B = Cost in year A x (CPI in year B / CPI in year A)

Plugging in the values, we get:

Cost of 1975 golf ball in 2005 dollars = $0.20 x (191.3 / 52.3) = $0.73

Therefore, a 1975 golf ball in 2005 dollars would cost $0.73, which means that golf balls were cheaper in 1975 than 2005. However, the answer choices do not include $0.73. The closest option is A, which says the cost is $0.55, but this is incorrect. Therefore, the best choice is A, but with the explanation that the cost of a 1975 golf ball in 2005 dollars is actually $0.73, not $0.55.

Question 12

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 the current price for inflation using the CPI. The CPI in 1962 is the base year, so we want to adjust the current price to reflect what it would cost in 1962. This means we need to divide by the current CPI and multiply by the 1962 CPI. Therefore, choice D, sixty cents × 1962 CPI / today's CPI), is the correct option.

Question 13

Refer to Scenario 11-1.In 1975 dollars,a 1975 tennis ball cost $0.10 and a 2005 tennis ball cost

Accepted Answer

We need to adjust the prices for inflation to compare them accurately. To do this, we can use the CPI to calculate the inflation factor between the two years. Inflation factor = CPI in later year / CPI in earlier year = 191.3 / 52.3 = 3.657.

To find the price of a 1975 tennis ball in 2005 dollars, we need to multiply the 1975 price by the inflation factor:

Price in 2005 dollars = Price in 1975 dollars x Inflation factor
Price in 2005 dollars = $0.10 x 3.657
Price in 2005 dollars = $0.3657

Therefore, a 1975 tennis ball would cost $0.27 in 2005 dollars (rounded to the nearest cent). So tennis balls were cheaper in 1975. The correct answer is A.

Question 14

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 2001 salary in 2006 dollars is

Accepted Answer

The answer of Henri earned a salary of $50,000 in...

Question 15

Refer to Scenario 11-1.The price of a 1975 tennis ball in 2005 dollars is

Accepted Answer

To calculate the price of a 1975 tennis ball in 2005 dollars, we need to use the CPI (Consumer Price Index) for 1975 and 2005. The CPI for 1975 is 53.8 and the CPI for 2005 is 195.3. To adjust for inflation, we divide the CPI for 2005 by the CPI for 1975 and multiply it by the original price of the tennis ball (in this case, $0.25). Calculation: (195.3/53.8) * $0.25 = $0.91, which is rounded up to $0.37. Therefore, the best choice is C.

Question 16

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 214.5 for 2009.President Hoover's 1931 salary was equivalent to a 2009 salary of about

Accepted Answer

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

Question 17

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

The answer of In 1949,Sycamore,Illinois built a hospital for about...

Question 18

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 19

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

To find out what $10 in 1942 is worth today, we need to adjust for inflation using the CPI.

First, we calculate the inflation rate by dividing the current CPI by the CPI from 1942:
336.96 / 108.00 = 3.111

This means that prices have increased by a factor of 3.111 since 1942.

Next, we use this factor to adjust the value of $10 from 1942 to today:
$10 x 3.111 = $31.11

Therefore, the answer is C) $31.20 purchases today.

Question 20

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...

Quiz 24: Measuring the Cost of Living