Asked by Justin Berry on Jun 04, 2024
Verified
If the CPI today is 120 and the CPI five years ago was 80, then something that cost $1 five years ago would cost $1.50 in today's prices.
CPI
An index measuring the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
- Perceive how fluctuations in inflation and deflation affect economic benchmarks and the potential to acquire goods.
- Understand how to calculate changes in purchasing power due to inflation or deflation.
Verified Answer
ZK
Zybrea KnightJun 07, 2024
Final Answer :
True
Explanation :
The increase in CPI from 80 to 120 represents a 50% increase (40/80 = 0.5). Therefore, an item that cost $1 five years ago would cost $1.50 today.
Learning Objectives
- Perceive how fluctuations in inflation and deflation affect economic benchmarks and the potential to acquire goods.
- Understand how to calculate changes in purchasing power due to inflation or deflation.
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