Real and nominal value interpretation
The formula for calculating the real value of an amount $x$ in a given year using dollars from a particular reference year is 

$$
\frac{x_{baseyear}}{x_{current year}}=\frac{CPI_{base year}}{CPI_{current year}} 
$$

So in your hypothetical example (where the deflator is higher in 1980 than in 2000, which indicates deflation over the period), the value of \$5 in 2000 is equal in 1980 to:

$$
x_{current year}=x_{base year}*\frac{CPI_{current year}}{CPI_{base year}} 
$$

or

$$
$5*\frac{1.6}{1}=$8 
$$

So in your example, a basket of goods costing \$5 in 2000 would cost \$8 in 1980.