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The CPI in 1970 was 38.8. The CPI in 2007 was 200. The purchasing power of $50,000 in 1970 was _____ the purchasing power of $200,000 in 2007.

A. Same
B. Comparable to

Answer :

The CPI in 1970 was 38.8, while the CPI in 2007 was 200. The purchasing power of $50,000 in 1970 was higher than the purchasing power of $200,000 in 2007

Explanation:The Consumer Price Index (CPI) indicates the overall price change over time for a particular fixed basket of products and services purchased by customers. The CPI is used to calculate the actual inflation rate, which shows how much the price of a particular basket of products has changed from a specific year to another. The Consumer Price Index (CPI) in 1970 was 38.8, whereas in 2007 it was 200. It indicates that the overall inflation rate increased over time, causing the price of products to rise as well. As a result, the purchasing power of money decreased. In 1970, $50,000 was a considerable amount of money, and one could buy many things with it. But as the CPI increased over time, it resulted in a decrease in the purchasing power of the currency. So, the purchasing power of $50,000 in 1970 was greater than the purchasing power of $200,000 in 2007.

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