Question

Scenario 6-1 Grant Smith was a doctor. In 1944, he made $12,000. His daughter, Lisa Smith, is also a doctor. Last year she made $275,000. The price index in 1944 was 17.6 and the price index last ye was 200 Refer to Scenario 6-1. What is Lisa's income in 1944 dollars? a. $15,667 O b. $24,200 O c. $17,401 O d. $19,322

Answer 1

1. b
(Income in 1944 = Income*(CPI in 1944/CPI last year) = (275,000)*(17.6/200) = 24,200)

2. c
(As the quality changes are improved so unmeasured quality change is most relevant.)