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12 December, 11:53

Suppose that you were born in 1999. 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 2017, given that the CPI was 166.6 in 1999 and 245.1 in 2017?

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  1. 12 December, 15:07
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    = $147.12

    Explanation:

    First, we determine the amount received by Mother in 199 9 = $100

    Based on this,

    The Consumer Price Index in 1999 = 166.6

    The Consumer Price Index in 2017 = 245.1

    We then calculate the amount it would cost in 2017 to buy similar goods bought by mother in 1999

    = Value in 2017 = Amount received in 1999 x (2017 CPI / 1999 CPI)

    = $100 x (245.1/166.6)

    = $100 x 1.471

    = $147.12

    This means that the baby shower gift received at $100 in 1999 will cost $147.12 to buy in 2017.
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