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.

Economics (inflation)  Henry, Thursday, January 5, 2012 at 4:56pm
1. (171.9/9) * 100% = 1910 %.
It went from 100% to 1910%.
% Increase = 1910%  100% = 1810%.
OR:
Increase = 171.99 = 162.9.
%Increase = (162.9/9) * 100% = 1810%.
2. Cost = (218/31) * $2800 = $19,690.32
3. 20101964 = 46 years.
$19,690.32/46 yrs. = $428.05 /yr.
Cost = 19,690.32+428.05/yr * 2yrs =
$20,546.42 = Cost of new car(yr 2012).
Yes.
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