Suppose that you were born in 2001. Also, suppose that your mother received a $100 baby shower gift at your birth. How much would it cost to buy a similar amount of goods and services in 2018, given that the CPI was 177.1 in 2001 and 251.1 in 2018?

a. $70.53

b. $100.00

c. $141.78

d. $241.11

c. $141.78

Explanation:

CPI or consumer price index is a measure that examines the weighted average of prices of a basket of consumer goods and services.

We will calculate the price of $100 baby shower gift in 2018 by,

Amount in 2018 Dollars = Amount in 2001 Dollars * (Price Level in 2018 / Price Level in 2001)

= $100 * (251.1/177.1) = $141.78

It would cost $141.78 to buy a similar amount of goods and services in 2018.