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 2014 spending in 2009 dollars is about
A)$40,000.
B)$44,100.
C)$37,838.
D)$40,091.

Question

Quizplus · Accepted Answer

To find Harry's 2014 spending in 2009 dollars, we need to adjust for inflation using the consumer price index (CPI). The CPI for 2009 was 220, and the CPI for 2014 was 231. This means that the cost of goods and services increased by (231 - 220) / 220 * 100 = 5% from 2009 to 2014.To adjust Harry's 2014 spending to 2009 dollars, we need to divide it by (1 + 5%) = 1.05. This gives us $42,000 / 1.05 = $40,000.Therefore, Harry's 2014 spending in 2009 dollars is about $40,000.

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