On October 25, 1978 the Washington Post presented a graphic showing the declining purchasing power of the U.S. dollar. What was worth $1 in 1958 was worth only $0.44 in 1978. They illustrated the decline in value by showing a dollar that was 3 inches by 1 inch in 1959, and one that was 1.32 inches (44% of 3 inches) by .44 inches in 1978. What is wrong with this kind of a display?
A) You can't equate dollars in 1958 with dollars in 1978.
B) The dollar actually increased in purchasing power over that period of time.
C) There is nothing wrong with doing this.
D) The area of the dollar is reduced by more than .44%.

Question

Quizplus · Accepted Answer

The display makes the mistake of only reducing the length and width of the dollar by 44%, but this actually reduces the area of the dollar by 74% (0.44 x 0.44 = 0.1936). Therefore, the display exaggerates the decline in purchasing power.

On October 25, 1978 the Washington Post Presented a Graphic