US national health expenditure was 148 per person in 1960 an

US national health expenditure was $148 per person in 1960 and $4790 in 200. The Consumer Price Index had a value of 29.6 in 1960 and a value of 17.2 in 2000. In 1960 dollars, how much was spending?

Solution

Spending in 2000 = $4,790

CPI in 1960 = 29.6

CPI in 2000 = 17.2

Calculate amount spend in 2000 in terms of 1960 dollars -

Amount in terms of 1960 dollars = Amount spent in 2000 * (CPI in 1960/CPI in 2000)

                                               = $4,790 * (29.6/17.2)

                                               = $4,790 * 1.72

                                               = $8,238.8

Thus, in 1960 dollars, $8,238.8 was spending.