If the CPI was 127 in 1972 and is 324 today,then $10 in 1972 purchased the same amount of goods and services as
A)$3.92 purchases today.
B)$25.51 purchases today.
C)$207.00 purchases today.
D)$324.00 purchases today.

Question

Quizplus · Accepted Answer

We need to use the formula of inflation rate:
Inflation rate = (CPI in year 2 - CPI in year 1) / CPI in year 1 x 100%

Using this formula, we can find the inflation rate between 1972 and today:

Inflation rate = (324 - 127) / 127 x 100% = 155.12%

This means that prices have increased by 155.12% since 1972.

To find out how much $10 in 1972 is worth today, we need to adjust for inflation. We can do this by multiplying $10 by the inflation rate and adding the result to $10:

$10 + ($10 x 155.12%) = $10 + $15.51 = $25.51

Therefore, $10 in 1972 is worth $25.51 today, which means that $25.51 purchases the same amount of goods and services as $10 did in 1972.

If the CPI Was 127 in 1972 and Is 324