In 1980, it cost $1.00 to buy a Hershey\'s candy bar. The GDP Deflator Decimal f

Question

In 1980, it cost $1.00 to buy a Hershey's candy bar. The GDP Deflator Decimal for 1980 is 0.46 (Index of 46) (2009 base year.) How much would the 1980 candy bar cost in 2009 dollars? a. $1.46 b. $2.17 c. $3.70 d. $4.60 In 1980, it cost $1.00 to buy a Hershey's candy bar. The GDP Deflator Decimal for 1980 is 0.46 (Index of 46) (2009 base year.) How much would the 1980 candy bar cost in 2009 dollars? a. $1.46 b. $2.17 c. $3.70 d. $4.60 In 1980, it cost $1.00 to buy a Hershey's candy bar. The GDP Deflator Decimal for 1980 is 0.46 (Index of 46) (2009 base year.) How much would the 1980 candy bar cost in 2009 dollars? a. $1.46 b. $2.17 c. $3.70 d. $4.60

Explanation / Answer

Correct option is (b).

Cost of the candy bar in 2009 dollars = (Cost in 1980 / GDP Deflator in 1980) x 100 = ($1 / 46) x 100 = $2.17

Alternatively, Cost of the bar in 2009 dollars = (Cost in 1980 / GDP Deflator Decimal) = $1 / 0.46 = $2.17

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