The Nominal Price of Milk Was $2

question 45

Short Answer

The nominal price of milk was $2.25 in 1998 while the CPI was 163.0 that year. Also, the CPI in 1970 was 38.8. What was the real value of 1998 milk in terms of 1970 dollars?

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Definitions:

Same Income

A scenario in which two or more entities earn or receive an identical amount of money.

Same Prices

A condition where two or more goods or services are sold at identical price points.

Consumption Bundle

A collection of goods or services that a consumer selects for purchase, representing a combination of different items that provide utility.

Income

The total money received by an individual or household from various sources, including wages, salaries, benefits, and investments.