Unformatted text preview: r. Table 1 in Chapter 1 of Everyday Economics gives the Purchasing Power
Converters that are used to express a dollar amount in a given year in terms of its
purchasing power during 2012.
Purchasing Power During 2012
of Y Dollars, in Year X = (Y Dollars, in Year X) x Purchasing
Power Converter in Year X) Example:
Could you have purchased more goods and services with $65 in 1989 or $83 in 2012?
According to Table 1, the Purchasing Power Converter for 1989 is 1.87. This means that
$65 in 1989 is equivalent in purchasing power to $121.55 during 2012:
Money required in 2012 to purchase what $65 dollars purchased in 1989:
$65 x 1.87 = $121.55 required in 2012.
In this case, you could purchase more goods and services in 1989 with $65 than you
could with $83 in 2012. You would have to have $121.55 to purchase the same amount
of goods and services in 2012 as you could with $65 in 1989.
Please Work the Following Problems:
12. Joe's take-home salary was $38,500 in 1985. His take-home salary was $62,225 in
2005. In terms of purchasing power, was Joe better off in 1985 or 2005?
a) better off in 1985 because $82,775.00 is greater than $74,047.75
b) better off in 2005 because $82,775.00 is greater than $74,047.75
c) no difference in purchasing power between 1985 and 2005 6 A movie ticket cost $4.25...
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This lab report was uploaded on 02/19/2014 for the course ARE 201 taught by Professor Eryuruk during the Spring '08 term at N.C. State.
- Spring '08