Page 62 - Book3E

1950 Price = 2011 Price x (1950 CPI / 2011 CPI) $0.75 = $7.00 x (24.1 / 225.4)
2011 Price = 1950 Price x (2011 CPI / 1950 CPI) $2.34 = $0.25 x (225.4 / 24.1)
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services today. How much money would you have needed in 1950 to buy the same amount of goods and services?
The CPI for 1950 = 24.1
The CPI for 2011 = 225.4
Use the following formula to compute the calculation:
So, in other words, an item that you could have purchased in 1950 for 75 cents would cost $7.00 today.
Let’s try this formula again. Assume your parents told you that in 1950 a movie cost 25 cents. How could you tell if movies have increased in price faster or slower than most goods and services? To convert that price into today’s dollars, use the CPI.
The CPI for 1950 = 24.1
The CPI for 2011 = 225.4
A movie in 1950 = $0.25
Use the following formula to compute the calculation:
So, according to the formula, most goods or services valued at 25 cents in 1950 would cost $2.34 today. However, movie ticket prices these days range between $6 and $10 or higher across the U.S. Apparently, movies have increased in price faster than most other goods and services.
Inflation—What Is a Dollar Worth?