Areal (or constant) dollar value can be calculated by dividing the nominal (unadjusted or current dollar) value by the for that year.

a) inflation rate
b) gdp growth rate
c) price index (decimal shifted)
d) any of the above

(C) price index (decimal shifted)

Explanation:

A real dollar value can be calculated as follows:

Real Dollar Value = .

The price index is an adjustment figure that is computed as (the price in the current year) divided by (the price in a base year). Thus the price index expresses the price in the current year in relative terms to $1 in the base year. As such, if the price index in the current year is 1.25, it means current year prices are 25% more expensive that they were in the base year.

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