The 2002 CPI was 177 and the 1982 CPI was 96.5. If your parents put aside $1000 for you in 1982, how much would you have needed in 2002 in order to buy what you could have with the $1000 in 1982?

Question

Quizplus · Accepted Answer

To calculate the inflation rate, we need to use the following formula:

Inflation rate = (CPI in later year - CPI in earlier year) / CPI in earlier year

Using the given information, we get:

Inflation rate = (177 - 96.5) / 96.5 = 0.8353

This means that prices increased by 83.53% from 1982 to 2002.

To find out how much $1000 in 1982 is worth in 2002 dollars, we need to adjust for inflation using the inflation rate we calculated:

Value in 2002 dollars = Value in 1982 dollars * (1 + inflation rate)

Value in 2002 dollars = 1000 * (1 + 0.8353) = $1834.20

Therefore, the best choice is A) $1834.20

The 2002 CPI Was 177 and the 1982 CPI Was