Macro 2.4-Adjusted Prices Accounting for Inflation

Last updated 12 months ago

4 questions

http://www.in2013dollars.com/Food/price-inflation

Example:

Finding yesterday's price in today....

1987 (Current) CPI was 113.485
1979 (Base) CPI was 79.915

The inflation rate between them was (113.485 - 79.915) / 79.915 * 100% = 42.01% inflation

Take a $20 worth of cheese in 1979.
In 1987, that cheese would cost $20 + $20 * (.4201) = $20 (1 + .4201) = $28.40

SHORTCUT!!!!!
I can also do an index factor of 113.485 / 79.915 = 1.42. From here, 1.42 * $20 = $28.40

Making 1980 the base and 1986 the current, how much was a $5 hamburger from 1980 in 1986 prices? (Shortcut: Use the index factor.)

Making 1990 the base and 1995 the current, how much was a $1 soda from 1990 in 1995 prices? (Shortcut: Use the index factor.)

Finding today's price in the past....

1987 (Base) CPI was 113.485
1979 (Current) CPI was 79.915

The deflation rate between them was (79.915 - 113.485) / 113.485 * 100% = -29.58% inflation

Take $20 worth of cheese in 1987.
In 1979, that cheese would cost $20 + $20 * (-.2958) = $20 (1 - .2958) = $14.08.

SHORTCUT!!!!!
I can also do an index factor of 79.915 / 113.485 = .7042. From here, .7042 * $20 = $14.08.

HINT: Want to check your work....
Use your price $14.08 and the index factor moving forward in time....$14.08 * 1.42 = $20.00

Macro 2.4-Adjusted Prices Accounting for Inflation

Making 1980 the base and 1986 the current, how much was a $5 hamburger from 1980 in 1986 prices? (Shortcut: Use the index factor.)

Making 1990 the base and 1995 the current, how much was a $1 soda from 1990 in 1995 prices? (Shortcut: Use the index factor.)

Making 1986 the base and 1980 the current, how much was a $5 hamburger from 1986 in 1980 prices? (Shortcut: Use the index factor.)

Making 1995 the base and 1990 the current, how much was a $1 soda from 1995 in 1990 prices? (Shortcut: Use the index factor.)