Use the Consumer Price Index below to answer the question. $$\begin{array}{l}
\text { Average Annual Consumer Price Index (1982-1984 = 100) }\
\begin{array} { c | c | c | c | c | c }
\text { Year } & \text { CPI } & \text { Year } & \text { CPI } & \text { Year } & \text { CPI } \
\hline 1986 & 109.6 & 1995 & 152.4 & 2004 & 188.9 \
1987 & 113.6 & 1996 & 156.9 & 2005 & 195.3 \
1988 & 118.3 & 1997 & 160.5 & 2006 & 201.6 \
1989 & 124.0 & 1998 & 163.0 & 2007 & 207.3 \
1990 & 130.7 & 1999 & 166.6 & 2008 & 215.3 \
1991 & 136.2 & 2000 & 172.2 & 2009 & 214.5 \
1992 & 140.3 & 2001 & 177.1 & 2010 & 218.1 \
1993 & 144.5 & 2002 & 179.9 & 2011 & 224.9 \
1994 & 148.2 & 2003 & 184.0 & 2012 & 229.6
\end{array}
\end{array}$$
-Suppose you needed $56,000 to maintain a particular standard of living in 2000. How much would you have needed in 1990 to maintain the same standard of living?
A)$74,000
B)$44,000
C)$43,000
D)$41,000

Question

Use the Consumer Price Index below to answer the question. $$\begin{array}{l}
\text { Average Annual Consumer Price Index (1982-1984 = 100) }\
\begin{array} { c | c | c | c | c | c } 
\text { Year } & \text { CPI } & \text { Year } & \text { CPI } & \text { Year } & \text { CPI } \
\hline 1986 & 109.6 & 1995 & 152.4 & 2004 & 188.9 \
1987 & 113.6 & 1996 & 156.9 & 2005 & 195.3 \
1988 & 118.3 & 1997 & 160.5 & 2006 & 201.6 \
1989 & 124.0 & 1998 & 163.0 & 2007 & 207.3 \
1990 & 130.7 & 1999 & 166.6 & 2008 & 215.3 \
1991 & 136.2 & 2000 & 172.2 & 2009 & 214.5 \
1992 & 140.3 & 2001 & 177.1 & 2010 & 218.1 \
1993 & 144.5 & 2002 & 179.9 & 2011 & 224.9 \
1994 & 148.2 & 2003 & 184.0 & 2012 & 229.6
\end{array}
\end{array}$$
-Suppose you needed $56,000 to maintain a particular standard of living in 2000. How much would you have needed in 1990 to maintain the same standard of living?
A)$74,000
B)$44,000
C)$43,000
D)$41,000

Quizplus · Accepted Answer

To maintain the same standard of living in 1990 as in 2000, you would need to adjust for inflation. The CPI in 2000 was 172.2 and in 1990 it was 130.7. So, you would need to multiply $56,000 by 130.7/172.2 to get the amount needed in 1990. This comes out to $43,000.

Use the Consumer Price Index Below to Answer the Question