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April 19, 2014

Homework Help: Economics (inflation)

Posted by Lisa on Wednesday, January 4, 2012 at 5:04pm.

Hello! Could someone please check my answers for the first 2 problems and help me out with the 3rd? Thanks!

1. If the CPI in 1863 was 9 and the CPI in 2000 was 171.9, how much has inflation increased (%) since 1863?

I used the inflation rate equation and got a 1898.89% increase as my answer.

2. If a new loaded Mustang in 1964 (CPI 31.0) cost $2,800, how much should the car cost in 2010 (CPI 218.0) after adjusting for inflation?

I used the "salary in today's currency" equation and got $19,690.32.

3. A new mustang starting price is over 20,000. Has the car kept pace with inflation or exceeded it? Why?

I'm confused by this, please help.

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