Question

In 1931, President Herbert Hoover was paid a salary of $75,000. Government statistics show a consumer price index of 15.2 for 1931 and 237 for 2015. President Hoover’s 1931 salary was equivalent to a 2015 salary of about: a) $1,057,894. b) $16,080,001. c) $1,169,408. d) $4,965.

Answer 1

Answer: c) $1,169,408.

Explanation:

Given the following:

Consumer price index(CPI) :

Year 1 = 1931 = 15.2

Year 2 = 2015 = 237

Salary in 1931 = $75,000

Equivalent salary in 2015 Given the details above:

Salary in 1931 × (CPI for year 2(2015)/ CPI for year 1(1931))

$75,000 × ( 237 / 15.2)

= $75,000 × 15.592105

= $1,169,407.8

= $1,169,408