Scenario 24-1
Grant Smith was a doctor in 1944 and earned $12,000 that year. His daughter, Lisa Smith, is a doctor today and she earned $210,000 in 2005. The price index in 1944 was 17.6 and the price index in 2005 was 184.
-Refer to Scenario 24-1.Grant Smith's 1944 income in 2005 dollars is about

Question

Quizplus · Accepted Answer

To find Grant Smith's 1944 income in 2005 dollars, we need to adjust his income for inflation using the price indices for both years. Using the formula:

(Income in year 2) = (Income in year 1) x (Price index in year 2) / (Price index in year 1)

We can calculate Grant Smith's 1944 income in 2005 dollars as:

(12000) x (184) / (17.6) = $125,455

Therefore, the answer is D.

Scenario 24-1 Grant Smith Was a Doctor in 1944 and Earned $12,000