You know that a candy bar costs sixty cents today.You also know the CPI for 1962 and the CPI for today.Which of the following would you use to compute the price of the candy bar in 1962 prices?
A)sixty cents (today's CPI - 1962 CP
B)sixty cents (1962 CPI - today's CP
C)sixty cents (today's CPI / 1962 CP
D)sixty cents (1962 CPI / today's CP

Question

Quizplus · Accepted Answer

To compute the price of the candy bar in 1962 prices, we need to adjust for inflation by using the ratio of the CPI for 1962 to the CPI for today. Therefore, we should divide the current CPI by the 1962 CPI to get a conversion factor. Option D is the only choice that involves dividing the 1962 CPI by today's CPI, so it is the best choice.

You Know That a Candy Bar Costs Sixty Cents Today