Question

Harry spent $39,000 in 2009 and $42,000 in 2014 on goods and services. The consumer price index was 220 for 2009 and 231 for 2014. Harry’s 2014 spending in 2009 dollars is about a. $37,838. b. $40,000. c. $40,091. d. $44,100.

Answer 1

Harry's 2014 spending in 2009 dollars is about $40,000 when adjusted using the consumer price index. By applying the formula accounting for inflation and the given CPI values, the nearest calculated amount is approximately $40,000 which is option d.

Step-by-step explanation:

The student's question involves calculating the equivalent value of Harry's 2014 spending in 2009 dollars using the consumer price index (CPI). To find out how much Harry's 2014 spending of $42,000 would translate into 2009 dollars, we use the CPI values provided for both years. The formula to adjust for inflation and convert 2014 dollars to 2009 dollars is:

(Amount in Year N dollars) x (CPI in Base Year) / (CPI in Year N).

Using this formula, Harry's 2014 spending in 2009 dollars is calculated as follows:

($42,000) x (220 CPI in 2009) / (231 CPI in 2014) ≈ $39,826.62.

However, since this exact number is not one of the options provided, we find the closest answer by rounding it to the nearest option given, which is b. $40,000. Therefore, Harry's 2014 spending in 2009 dollars is about $40,000.

Answer 2

40000

42000*(220/231)