Sue's 1943 income in the current year dollars is $13,016.
- The price index reflects the average level of prices and can be used to compute the relative differences in the prices of the same basket of goods between some periods.
Data and Calculations:
Sue's 1943 income = $12,000
Son's income in the current year = $220,000
Price index in 1943 = 18.9
Price index in the current year = 20.5
- Sue's 1943 income in current year dollars = $13,016 ($12,000 x 20.5/18.9)
Thus, Sue's earnings in 1943 is $13,016 in current year dollars.
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