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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

If the CPI is 200 in year 1980 and 300 today, then $600 in 1980 has the same purchasing power as _____ today.

a. $400

b. $500

c. $700

d. $900

To determine

Calculation of present worth of a dollar.

Explanation

Option (d)

The present value of $600 in 1980 is calculated as follows:

Present value of dollars = Dollar value1980 × (CPIPresentCPI1980)=600×(300200)

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