In 1971, when the consumer price index was 40.48, men earned a median income of $6,903 per year. If the consumer price index in 2012 was 229.6, how much was $6,903 in 2012 dollars?
A)$6,903
B)$37,504.6
C)$1,217
D)$39,153.4

Question

Quizplus · Accepted Answer

To adjust for inflation, we need to calculate the value of $6,903 in 2012 dollars. We can use the formula: 
Value in later year = Value in earlier year x (Price level in later year / Price level in earlier year)

Plug in the values: 
Value in 2012 dollars = $6,903 x (229.6 / 40.48) 
Value in 2012 dollars = $6,903 x 5.67 
Value in 2012 dollars = $39,153.4

Therefore, $6,903 in 1971 is equivalent to $39,153.4 in 2012 dollars. The best choice is D.

In 1971, When the Consumer Price Index Was 40