Applications of Per Capita and Proportions
Use the Historical CPI-U data table from the in-class CPI activity to answer questions 1-4.
1. From class we learned that in 2010 the federal debt was $13.56 trillion and the population of the U.S. was 309 million.
a. Use these values to compute the federal debt per capita in 2010. Round to the nearest dollar.
b. Use the CPI table to calculate what the federal debt per capita from above would be in 1983 dollars. Round to the nearest dollar.
2. In 1980, a Domino's large pizza cost $4.99. What would be the cost of that pizza in 1995 dollars? Round to the nearest cent.
3. a. In 1976, the average price for a new car was $5,000. What would be the cost of that car in 2012 dollars? Round to the nearest cent.
b. The average price for a new car in 2012 was about $30,000. Did the actual price of a new car increase more or less than the rate of inflation? Explain how you know. Be specific and quantitative (use numbers).
4. a. According to a NY Times article on December 13, 2009, the average selling price of a 32" LCD TV was $600. What would be the cost of that same TV in 2013 dollars? Round to the nearest cent.
b. Many retailers sold a 32" LCD TV for only $100 during the holiday season of 2013. How did the actual price compare to estimated price above?
5. This table shows the price of gold in a given year:
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
$342.75 $417.25 $435.60 $513.00 $635.70 $836.50 $869.75 $1,087.50 $1,420.25 $1,531.00 $1,664.00
a. Use CPI to predict what the 2012 value would have been if gold had only increased due to inflation since 2002. How does the calculated value compare to the actual 2012 value? Round to the nearest cent.
b. Use CPI to adjust for inflation for another pair of years. Did gold's price increase according to inflation for these years?
6. This table shows the median household income in the United States for selected years.
Year 1970 1980 1990 2000 2010
CPI 38.800 82.400 130.700 172.200 218.056
Actual Income $8734 $17,710 $29,943 $42,148 $49,445
Income in 2010 dollars
a. Use CPI to adjust the median household income to 2010 dollars for each of the years. Round to the nearest dollar.
b. In what year was the median income the lowest, when taking inflation into consideration?
c. In what year was the median income the highest, when taking inflation into consideration?
Using Excel for CPI
U.S. CPI - All items (1982-84=100)
Price $ 1.00
from year 1976
U.S. CPI-U is worth in year 2015
(U = all urban consumers) $ 4.17
1982-84=100 growth rate
1960 29.600 1.7%
1961 29.900 1.0%
1962 30.200 1.0%
The US CPI Calculator Excel file shown above is located in IvyLearn in the Assignment tab under HW4-CPI for your use. Follow instructions on Excel spreadsheet to complete the following.
7. Cost of groceries. Use the grocery list below and the CPI calculator Excel spreadsheet to calculate what the cost of each item would be in terms of 1983 dollars. What would the items cost in 2016 dollars?
Eggs ______________ _________________
Bread ______________ _________________
Bacon ______________ _________________
8. Birth Year: Use the website http://www.1980sflashback.com/1980/economy.asp to look up the prices of the 3 items below from your birth year (or some early year), then open the CPI calculator Excel spreadsheet and use it to calculate what the cost of each item would be in terms of 2016 dollars.
Item Price in _________(Year) Price in 2016
Gallon of Milk
First Class Stamp
Gallon of Regular Gas