Related to the Economics in Practice on p. 133: The Consumer Price Index in the United States was 215.3 in 2008 and 214.5 in 2009. If a retiree received a monthly pension check of $4,500.00 in 2008 and her pension is tied to the CPI, how much would her monthly pension check be in 2009?
A) $4,464.00
B) $4,483.28
C) $4,500.00
D) $4,714.50

Question

Quizplus · Accepted Answer

To calculate the new monthly pension check, we need to adjust the old amount by the change in the CPI. The formula for this calculation is:

New amount = old amount x (new CPI / old CPI)

Plugging in the values, we get:

New amount = $4,500.00 x (214.5 / 215.3) = $4,483.28

Therefore, the retiree's new monthly pension check in 2009 would be $4,483.28, which corresponds to answer choice B.

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