Question

Suppose that you were born in 1995. Also, suppose that your mother received a $100 baby shower gift at your birth. How much would it cost to buy a similar amount of goods and services in 2015 given that the CPI was 152.4 in 1995 and 237.0 in 2015?

Answer 1

$155.5

Step-by-step explanation:

The Consumer price index indicates how prices change through time of a determined basket of goods and services. Inflation is calculated by the percentage change of this index in two periods of time. In this case, we must calculate the percentage change:

1995: 152.4

2015: 237.0

(237-152.4/152.4)*100= 0.555*100=55.5%

The inflation rate for this period is 55.5%. To buy a similar amount of goods and services in 2015 we have to pay an 55.5% extra, which means we have to pay $155.5