Janelle earned a salary of $62,000 in 2004 and $80,000 in 2014.The consumer price index was 126 in 2004 and 170 in 2014.Janelle's 2004 salary in 2014 dollars is
A)$45,953.
B)$89,280.
C)$107,953.
D)$83,651.

Question

Quizplus · Accepted Answer

We can use the formula for adjusting a past dollar amount to its value in a different year based on the CPI:

Adjusted Dollar Amount = Dollar Amount x (CPI in new year / CPI in old year)

Plugging in the values given:

Adjusted Dollar Amount = $62,000 x (170 / 126) = $83,651. Therefore, the best choice is D.

Janelle Earned a Salary of $62,000 in 2004 and $80,000