In 1976, the cost of a ticket to see a movie in the theater was $4. In 2019, a movie ticket cost $9. If the CPI is 56 for 1979 and 228 for 2019, to find the real 2019 value of a 1976 movie ticket we would multiply its nominal value in1976 by which ratio?

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Quizplus · Accepted Answer

To find the real value of a 1976 movie ticket in 2019 dollars, we need to adjust the 1976 price by the change in the Consumer Price Index (CPI) from 1976 to 2019. This is done by multiplying the 1976 price by the ratio of the 2019 CPI to the 1976 CPI, which is 228/56. This adjusts the 1976 price to reflect 2019 price levels.

In 1976, the Cost of a Ticket to See a Movie