Suppose your grandfather earned a salary of $12,000 in 1964.If the CPI is 31 in 1964 and 219 in 2010,then the value of your grandfather's salary in 2010 dollars is approximately
A) $84,775.
B) $63,830.
C) $37,200.
D) $26,280.

Question

Quizplus · Accepted Answer

The correct answer is A.The CPI (Consumer Price Index) measures the change in the price of goods and services over time. In this case, the CPI in 1964 was 31 and the CPI in 2010 was 219. This means that the cost of goods and services increased by a factor of 219/31 = 7.0645 between 1964 and 2010.To find the value of your grandfather's salary in 2010 dollars, we need to multiply his salary by the factor 7.0645. Therefore, the value of his salary in 2010 dollars is $12,000 * 7.0645 = $84,774.

Suppose Your Grandfather Earned a Salary of $12,000 in 1964