**Understanding the Impact of Inflation on Earnings**In 1995, when the consumer price index (CPI) was 152.38, women earned a median income of $12,130 per year. To understand how inflation affects purchasing power, it's crucial to adjust this amount for changes in the CPI. If the consumer price index in 2015 was 236.99, how much was $12,130 in 2015 dollars? Choose the correct adjusted amount from the options below:- $18,865- $16,259- $12,130- $7,799**Explanation of the Calculation:**To compute the equivalent amount in 2015 dollars, we use the formula for adjusting amounts for inflation:\[ \text{Adjusted Amount} = \text{Original Amount} \times \frac{\text{CPI in 2015}}{\text{CPI in 1995}} \]Using this formula, we can determine how $12,130 in 1995 compares to 2015, considering the changes in CPI. This helps to account for the decrease in purchasing power due to inflation over the years.Select the correct option to fully understand the real value of median income earned by women in 1995 when expressed in 2015 dollars.

Given - Consumer Price Index in 2015 = 236.99, Consumer Price Index in 1995 = 152.38, Median Income…

Answered: In 1995, when the consumer price index…

In 1995, when the consumer price index was 152.38, women earned a median income of $12,130 per year. If the consumer price index in 2015 was 236.99, how much was $12,130 in 2015 dollars?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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