In 1964 in London, Ontario one could buy a chili-dog and a root beer for $1.25, today the same chili dog and root beer cost $5.00. Which set of CPI's would mean that the cost in today's dollars was the same as in 1964

Question

Lance Lynn

Computers & Technology

2 June, 19:06

In 1964 in London, Ontario one could buy a chili-dog and a root beer for $1.25, today the same chili dog and root beer cost $5.00. Which set of CPI's would mean that the cost in today's dollars was the same as in 1964

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Answers (1)

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Izabelle · Answer 1

3% inflation rise. No correct cpi option

Explanation:

Consumer Price Index (CPI) is calculated by the Bureau of Economic Analysis and Statistics of a country monthly and annually.

Consumer Price Index (CPI) is used for measuring the changes in the price level of consumer goods and services purchased by households.

Calculating the consumer price index; price in 1964 = $1.25, today price = $5.0.

Therefore, consumer price index = Price in today - price in 1964: price in 1964,.

Consumer Price index (CPI) = $ (5-1.25) / 1.25 = 3.75/1.25 = 3 Percent price inflation rise.

For the first cpi; 112-80/80 = 0.4 percent (not equal to the 3 Percent inflation rise).

For the second cpi: 141.6-60/60 = 1.36 Percent inflation rise (not equal to the 3 Percent inflation rise).

For the third CPI: 126.4-75/75 = 0.68 percent inflation rise[not equal to the 3 Percent inflation rise].

For the third CPI: 108.5-90/90=0.21 percent inflation rise (not equal to 3 Percent inflation rise)

Therefore, none of the options are right.