A person pays cash for a house in 1990 for $200 000 and sells it in 2000 for $400 000. Over the same period the CPI has risen from its base index to 200. In terms of this asset, the purchasing power of this person:

Question

Quizplus · Accepted Answer

The purchasing power has remained unchanged because the house price doubled from $200,000 to $400,000, which matches the doubling of the CPI from its base index to 200, indicating that the real value of the asset has stayed the same.

A Person Pays Cash for a House in 1990 for $200