Nate collected Social Security payments of $220 a month in 1985.If the price index rose from 90 to 108 between 1985 and 1986,then his Social Security payments for 1986 should have been
A)$228.
B)$238.
C)$257.
D)$264.

Question

Quizplus · Accepted Answer

To calculate the inflation-adjusted Social Security payments for 1986, we need to use the formula:

Inflation-adjusted payment = (Payment in the base year x Current price index) / Base price index

Here, the base year is 1985 and the current year is 1986. So, we have:

Inflation-adjusted payment for 1986 = (220 x 108) / 90 = 264

Therefore, Nate's Social Security payments for 1986 should have been $264.

The closest option is D, which is the correct answer.

Nate Collected Social Security Payments of $220 a Month in 1985.If