If relative to the base period of 1982 through 1984, the consumer price index for 2017 was 244, then the purchasing power of a dollar in 2017, measured in 1982-1984 dollars, was
A) $2.44.
B) $0.24.
C) $0.41.
D) $4.10.
E) $1.00.

Question

Quizplus · Accepted Answer

To calculate the purchasing power of a dollar in 2017 relative to the base period of 1982-1984, we need to divide the CPI of 2017 by the CPI of the base period and then multiply by 100:

Purchasing Power = (CPI of 2017 / CPI of the base period) x 100

Purchasing Power = (244 / 100) x 100 = 244%

This means that the general price level in 2017 was 244% higher than the base period of 1982-1984. Therefore, the purchasing power of a dollar in 2017, measured in 1982-1984 dollars, would be:

(1 / 2.44) x 100 = 40.98

Rounding to the nearest cent, we get $0.41. Therefore, the correct answer is C ($0.41).

If Relative to the Base Period of 1982 Through 1984