A popular index number is the Consumer Price Index, commonly referred to as the

Question

A popular index number is the Consumer Price Index, commonly referred to as the CPI. It is calculated monthly by the US Bureau of Labor Statistics. The rate of inflation is the relative change in the CPI You can adjust for inflation using the formula below: CPIdestred year price in Saestred year-price in $comparison year Example: A house that cost $50,000 in 1960 would cost how much in 2010 dollars? Using the CPI table from your textbook (1980 reference year 5 4 and CPI 232.8. Plugging we find the CPI

Explanation / Answer

1980 CPI = 78.2 in 2000 column

CPI in 1960 = 19.9

Price in 1980 = 50000 * 78.2/19.9

Price in 1980 = $196482.41 or $196482

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