The value of the consumer price index increased from 140 to 147 during 2006. Nathan opened a bank account at the beginning of 2006, and at the end of 2006 his account balance was $12,840. The purchasing power of Nathan's account increased by 2 percent during the year. We can conclude that Nathan opened his account with a deposit of $11,500 at the beginning of 2006.

Question

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The increase in the consumer price index (CPI) from 140 to 147 indicates inflation, which reduces the purchasing power of money. If Nathan's purchasing power increased by 2%, this means his account balance grew at a rate that not only compensated for the inflation but also increased in real terms. The conclusion about the initial deposit amount cannot be directly drawn without knowing the exact inflation rate and the interest rate his account earned.

The Value of the Consumer Price Index Increased from 140