Question

Suppose that you were born in 1999. 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 2017, given that the CPI was 166.6 in 1999 and 245.1 in 2017?

Answer 1

Answer:

= $147.12

Explanation:

First, we determine the amount received by Mother in 199 9= $100

Based on this,

The Consumer Price Index in 1999 = 166.6

The Consumer Price Index in 2017 = 245.1

We then calculate the amount it would cost in 2017 to buy similar goods bought by mother in 1999

= Value in 2017 = Amount received in 1999 x (2017 CPI / 1999 CPI)

= $100 x (245.1/166.6)

=  $100 x 1.471

= $147.12

This means that the baby shower gift received at $100 in 1999 will cost  $147.12 to buy in 2017.