In 1972 in Kelowna,BC,one could buy model rocket engines for $1.50.If those same engines cost $3.00 today,which of the following sets of CPIs represents the same purchasing power for the cost in 1972 and the cost today?

Question

Quizplus · Accepted Answer

To calculate for the equivalent purchasing power between 1972 and today, we need to use the CPI (Consumer Price Index) for both years. The formula is:

(cost of item today) x (CPI in year of purchase) = (cost of item in year of purchase) x (CPI today)

Let's use choice C as an example:

$3.00 (today's cost) x 60 (CPI in 1972) = $1.50 (1972's cost) x 120 (CPI today)

$180 = $180

This means that $1.50 in 1972 has the same purchasing power as $3.00 today with the CPIs of 60 and 120, respectively. Therefore, the answer is choice C.

In 1972 in Kelowna,BC,one Could Buy Model Rocket Engines for $1.50.If