Marion collected Social Security payments of $500 per month in 2000. If the price index rose from 105 to 120 between 1990 and 2000, then her Social Security payments for 1990 should had been around

Question

Marion collected Social Security payments of $500 per month in 2000. If the price index rose from 105 to 120 between 1990 and 2000, then her Social Security payments for 1990 should had been around _____

Answer 1

The change in price index between 1990 and 2000 is: 120/105 = 8/7

Here social security payment should have changed at the same rate. If her social security for 1990 is X, then

500/X= 8/7, so X = 437.5

So her social security payment for 1990 should have been around $438 per month.