Suppose that the price of a slice of pizza in New York City was 30 cents in 1970. Further, the Consumer Price Index (CPI) in 1970 was 75 and in 2018 is 250. The price of the slice of pizza in 2018 dollars is:

Question

Quizplus · Accepted Answer

The CPI is a measure of the average change in prices over time in a fixed basket of goods and services. In this case, the CPI increased from 75 in 1970 to 250 in 2018, which means that the overall price level increased by a factor of 250/75 = 3.33. Therefore, the price of a slice of pizza in 2018 dollars is 30 cents * 3.33 = $1.00.

Suppose That the Price of a Slice of Pizza in New