Scenario 6-1
Grant Smith was a doctor.In 1944,he made $12,000.His daughter,Lisa Smith,is also a doctor.Last year she made $275,000.The price index in 1944 was 17.6 and the price index last year was 200.
-Refer to the Scenario 6-1.What is Grant's 1944 income in last year's dollars?

Question

Quizplus · Accepted Answer

We need to use the formula for adjusting for inflation to find Grant's 1944 income in last year's dollars:
Adjusted Income = (Original Income) x (Price Index Last Year) / (Price Index in 1944)
Adjusted Income = $12,000 x 200 / 17.6
Adjusted Income = $136,363.63
Therefore, the correct answer is D) $136,363.

Scenario 6-1 Grant Smith Was a Doctor.In 1944,he Made $12,000.His Daughter,Lisa Smith,is