In an article in the Wall Street Journal, a professor of financial planning noted the effect of

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In an article in the Wall Street Journal, a professor of financial planning noted the effect of rising prices on purchasing power: "Today, $2,000 a month seems reasonable [as an income for a retired person in addition to the person's Social Security payments], but 40 years from now that's going to be three cups of coffee and a donut." Suppose that currently three cups of coffee and a donut can be purchased for $10. The CPI in 2014 was 237. What would the CPI have to be in 2054 for $2,000 to be able to purchase only three cups of coffee and a donut? Assume that the prices of coffee and donuts increase at the same rate as the CPI during these 40 years.
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Economics

ISBN: 978-0134106243

6th edition

Authors: R. Glenn Hubbard

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