Harry spent $39,000 in 2009 and $42,000 in 2014 on goods and services.The consumer price index was 220 for 2009 and 231 for 2014.Harry's 2009 spending in 2014 dollars is about
A)$43,290.
B)$37,143.
C)$40,950.
D)$40,857.

Question

Quizplus · Accepted Answer

To find the 2009 spending in 2014 dollars, we need to adjust the 2009 spending based on the change in the consumer price index (CPI) from 2009 to 2014.
The CPI ratio between 2014 and 2009 is: 
CPI ratio = CPI in 2014 / CPI in 2009 = 231/220 ≈ 1.05

Therefore, the 2009 spending in 2014 dollars is:
2009 spending in 2014 dollars = 2009 spending x CPI ratio
2009 spending in 2014 dollars = $39,000 x 1.05
2009 spending in 2014 dollars = $40,950

So, the closest choice is C, $40,950.

Harry Spent $39,000 in 2009 and $42,000 in 2014 on Goods