In 2015, Annie, an 80­year­old, is telling her granddaughter Mary about the good old days. Annie says that in 1935, you could buy a nice house for

$15,000 and a jacket for $5. Mary says that in 2015 such a house cost $220,000 and such a jacket cost $70. The CPI in 1935 was 16.7 and in 2015 it was 218.1.

Which house has the lower real price? Which jacket has the lower real price?

Use the following information to work Problems 8 and 9.

Consumer prices drop as falling oil costs push inflation lower Falling oil prices pushed the CPI down 0.1 percent in December 2015. Energy prices fell 2.4 percent and the price of gasoline fell by 3.9 percent.

Source: Los Angeles Times, January 20, 2016