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15 November, 18:36

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 2009 spending in 2014 dollars is about?

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  1. 15 November, 18:57
    0
    = $40,950

    Explanation:

    The consumer price index is used to measure the rate of inflation and increase in price level over a period of time.

    A change in price index from 220 to 231 indicate an inflation rate of 5%

    Therefore, year 2009 spending of $39,000 in 2014 dollars will equal

    = 231/220 * 39,000

    = $40,950

    Year 2009 spending of $39,000 in 2014 dollars = $40,950
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