Question

The average household income in the United States in 1975 was $13,800, and the CPI was 53.8. Convert the average income in 1975 to 2018 dollars. The CPI was 251.1 in 2018. Round your answer to the nearest cent. 1975 income in 2018 dollars: $

Answer 1

The average income in 1975 in 2018 dollars is approximately $64,152.42.

Step-by-step explanation:

To convert the average household income in 1975 to 2018 dollars, we need to adjust for inflation using the Consumer Price Index (CPI). The formula to do this is:

New Salary = (Old Salary) * ( New CPI / Old CPI)

Using the given information:

Old Salary = $13,800

Old CPI = 53.8

New CPI = 251.1

Plugging in the values, we can calculate the new salary as follows:

New Salary = ($13,800) * (251.1 / 53.8) = $64,152.42

Therefore, the average income in 1975 in 2018 dollars would be approximately $64,152.42.