i was reading an article the other day about spending habits of republicans.
It states that hoover raised federal spending 38 percent (adjusted for current dollars)
does this mean its adjusted for inflation, and if so isnt 38 percent 38%. How do you adjust a percentage for inflation?
First you take A: the degree by which spending increased (if spending went up 20%, spending multiplied by 1.2) and divide it by B: the degree by which prices changed (if prices, as a whole, went up by 10%, the price level multiplied by 1.1). Then take A and divide it by B and you have the degree by which spending increased adjusted to inflation. In this instance, 1.2 divided by 1.1 equals 1.0909, meaning real spending went up by 9.09%.
But in the Hoover era the numbers would be different, although the general calculation always works this way whether there is inflation or deflation (of prices.) They are not adjusting the percentage for inflation, they are just adjusting spending for inflation.
That means if you take the spending amount from the first period of spending that the context is refering to say for example $2billion. Then say for example the second amount in the comparison is $15billion. But if you do the inflation calculation of what $15 billion would be worth at the time of the first comparison amount. Then it would be worth 38% more than $2billion.