Asked by Bryanna Garcia on May 02, 2024
Verified
Refer to Table 24-4. To the nearest dollar, Lee's Year 2 food expenditures in Year 1 dollars amount to
A) $8,441.
B) $145.
C) $7,866.
D) $8,327.
Year 1 Dollars
A term used to adjust monetary values to a base year's value to account for inflation, facilitating comparison over time.
Food Expenditures
The amount of money spent by individuals, households, or a country on food products and services.
- Absorb the fundamentals of how consumer price indices (CPI) are determined and analyzed.
Verified Answer
ZK
Zybrea KnightMay 07, 2024
Final Answer :
C
Explanation :
Lee's Year 2 food expenditures in Year 1 dollars are calculated by adjusting Year 2 expenditures for inflation to compare them in Year 1's dollar terms. This involves dividing Year 2's expenditures by the inflation factor (or multiplying by the inverse of the inflation rate) to get the equivalent amount in Year 1 dollars. The correct calculation leads to the answer provided in option C, $7,866, to the nearest dollar.
Learning Objectives
- Absorb the fundamentals of how consumer price indices (CPI) are determined and analyzed.