Scenario 24-3
Grant Gant was a doctor in 1944 and earned $12,000 that year.His daughter,Gretta Gant,is a doctor today and she earned $210,000 in 2005.The price index was 17.6 in 1944 and 184 in 2005.
-Refer to Scenario 24-3.In real terms,Grant Gant's income amounts to about what percentage of Gretta Gant's income?

Question

Quizplus · Accepted Answer

To compare real incomes, adjust for inflation using the price index. Grant's real income in 2005 dollars is ($12,000 * 184 / 17.6) = $125,454.55. This is about 59.7% of Gretta's $210,000 income.

Scenario 24-3 Grant Gant Was a Doctor in 1944 and Earned $12,000