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If you were able to travel back in time to the year 1960, you would only have to fork up $1.03 for a movie ticket, instead of the $6.00 (or more) you probably pay today.
Let’s take a look and see how far today’s dollar would go if we traveled back to other decades:
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Movie
Ticket |
$6.00 |
$4.56 |
$2.87 |
$1.35 |
$1.03 |
Stamp |
$0.33 |
$0.25 |
$0.16 |
$0.07 |
$0.06 |
Car |
$18,000 |
$13,678 |
$8,623 |
$4,060 |
$3,098 |
House |
$120,000 |
$91,186 |
$57,488 |
$27,070 |
$20,651 |
Soda |
$0.65 |
$0.49 |
$0.31 |
$0.15 |
$0.11 |
Why are things so expensive today? Inflation!
Inflation is a steady increase in the price of goods and services which causes a decrease in the value of money over time. So as each year goes by and inflation causes prices go up, your money will actually buy less and less. (Deflation is the decrease in prices, caused by a decrease in the supply of money or credit.)
Let’s take a look at the inflation cycle:
People want to buy more fancy cars, so the demand increases |
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People need more money to buy fancy cars, so salaries increase |
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Car manufacturers have to pay employees more, so the price of cars increases |
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Inflation |
Historically, inflation has occurred at about 4 percent each year.
 Using the 4 percent annual inflation rate, if a pair of sneakers cost $75 in the year 2000, how much would they cost in the year 2010? [HINT: 4% of $75 is $3]
ANSWER
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