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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

A house cost $10,000 in 1976. What is this price equivalent to in 2001 dollars? (Use Exhibit 2 to find the CPI in the years mentioned.)

To determine

The equivalent cost of the house.

Explanation

Given the house cost in 1976 is $10,000. The value of CPI for 1976 is 56.9 and the CPI for 2001 is 177.1.

The house cost in 2001 can be calculated by substituting the respective values in Equation (1) as follows:

House costCurrent year=House costEarlier year×(CPICurrent yearCPIEarlier year) (1)

House cost2001

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