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? sixty cents (today’s CPI – 1962 CPI) sixty cents (1962 CPI / today’s CPI) sixty cents (today’s CPI / 1962 CPI) sixty cents (1962 CPI – today’s CPI)

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?

sixty cents (today’s CPI – 1962 CPI)

sixty cents (1962 CPI / today’s CPI)

sixty cents (today’s CPI / 1962 CPI)

sixty cents (1962 CPI – today’s CPI)

 

 

Answer:

sixty cents (1962 CPI / today’s CPI)

As (sixty cents / today’s CPI) gives real value of candy bar.

If this is multiplied by 1962 CPI, it will give nominal value of candy bar in 1962.

Hence,  (sixty cents / today’s CPI) * (1962 CPI)

Asked on February 15, 2018 in economics.
Add Comment
0 Answer(s)
  • Votes
  • Oldest

Your Answer

By posting your answer, you agree to the privacy policy and terms of service.