Henri earned a salary of $50,000 in 2001 and $70,000 in 2006. The consumer price index was 177 in 2001 and 265.5 in 2006. Henri's 2006 salary in 2001 dollars is

Henri's 2006 salary in 2001 dollars =$46,666.66

Explanation:

A rise in the price index implies inflation

Inflation is the increase in the general price level. Inflation erodes the value of money.  

This price index is the weighted average price of a basket of goods and services consumed by a typical consumer. It is used to measure the rate of inflation.  

So we can determine the salary in the base year value  as follows:  

2006 Salary in the base year terms=

CPI base year/CPI in the current year × salary in the current year

CPI base year- 177, CPI in the current yea- 256.5,

Salary in the current year - 70,000

Henri 2006 Salary in 2001 Dollar

=177/265.5 ×70,000/265.5 = 46,666.66

Henri's 2006 salary in 2001 dollars =$46,666.66

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi