Question

1. Problems and Applications Q1 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 2018, given that the CPI was 177.1 in 2001 and 251.1 in 2018

Answer 1

Answer: $141.78

Step-by-step explanation:

The Consumer Price Index(CPI) is useful for calculating inflation because it monitors the change in certain goods and services over the years.

It can be used in the following manner.

Price in 2018 = (Price in 2001 /CPI in 2001)* CPI in 2018 year

= (100 / 177.1) * 251.1

= $141.78