Nominal personal consumption expenditures in the United States were $1760.4 billion in 1980 and rose to $3839.3 billion in 1990.The price index for personal consumption expenditures was 58.5 for 1980 and 92.9 for 1990,where 1992 was the base year.Calculate the percent change in real personal consumption expenditures (rounded to the nearest percentage point)in the decade.
A)37%
B)59%
C)118%
D)137%

Question

Quizplus · Accepted Answer

The correct answer is A.The percent change in real personal consumption expenditures is calculated as follows:(New real value - Old real value) / Old real value * 100To calculate the real value, we need to divide the nominal value by the price index.Real value in 1980 = 1760.4 / 58.5 = 30.26 billionReal value in 1990 = 3839.3 / 92.9 = 41.32 billionPercent change = (41.32 - 30.26) / 30.26 * 100 = 36.9%Rounded to the nearest percentage point, the percent change is 37%.

Nominal Personal Consumption Expenditures in the United States Were $1760