In 1972 in Riverside,Iowa one could buy a bag of chips,a pound of hamburger,a package of buns,and a small bag of charcoal for about $2.50.If the same goods today cost about $6.00,which pair of CPIs would make the cost in today's dollars the same for both years?

Question

Quizplus · Accepted Answer

To adjust for inflation, we need to use a CPI ratio. We can calculate the ratio by dividing today's CPI (which is 156 as given) by the CPI in 1972 for each choice. 
For option A: 156/60 = 2.6
For option B: 156/65 = 2.4
For option C: 156/90 = 1.7333
The ratio with the closest value to 2.5 (which is approximately the ratio between $6.00 and $2.50) is option B, with a ratio of 2.4. 
So to get the cost in today's dollars for the 1972 purchase, we can multiply $2.50 by 2.4, which is $6.00 (the same price as today).

In 1972 in Riverside,Iowa One Could Buy a Bag of Chips,a