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Discussion Post
Dr. Evil was frozen in 1967, and being frozen for thirty years causes Dr. Evil to underestimate how much ransom money he should ask for. But just how much did the price level rise over those thirty years?
The Consumer Price Index (CPI) is just one price index that we use to measure inflation. The CPI was 33.4 in 1967 and 160.5 in 1997. Dividing 160.5 by 33.4 yields a factor of 4.8, so if Dr. Evil thought that one million dollars was a lot of money in 1967, an equivalent amount in 1997 would be $4.8 million. Imagine if you were cryogenically frozen in the 1960s and revived 30 years later. Changes in societal behavior, advances in technology, and even higher prices would all come as a shock to you! Find the price of a product in the past. You can search various websites for historical prices of popular products. One possibility is Historic Food Prices. Use the following Bureau of Labor Statistics table, which shows all the annual average CPIs for all years since 1913, to convert the price of the product you chose to the most recent dollar amount, as we did with Dr. Evil's $1 million. Make sure you also address the following questions:
Question 1. How does inflation affect our economy and the people in it?Question 2. Who does it hit the hardest?Question 3. How can you protect yourself against inflation?
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