Question

Suppose that you were born in 2001. Also, suppose that your mother received a $100 baby shower gift at your birth. How much would it cost to buy a similar amount of goods and services in 2017, given that the CPI was 177.1 in 2001 and 245.1 in 2017

Answer 1

Answer:  $138.40

Explanation:

CPI which stands for Consumer price index, is used to measure inflation. The price in 2017 will be different from that in 2001 because inflation would have occurred and the CPI can be used to find the new price in the following manner;

Cost of goods in 2017 = (Price in 2001/ CPI in 2001) * CPI in 2017

= (100 / 177.1) * 245.1

= $138.396

= $138.40