The Consumer Price Index (CPI) measures inflation, which is a general increase in prices. The following are several problems related to price increases.
a) In 1984 the CPI was 100; 30 years later (2014), it was 235. What was the annual rate of inflation?
b) Cathy and Anne both currently earn $100,000. If the annual rate of inflation is 4 percent, how much must each earn after ten years to maintain their purchasing power?
c) Your parents bought a home for $50,000 in 1985 and sold it in 2015 for $250,000. What was the annual rate of price increase over the 30 years?