a. Using Table 1.3, plot the inflation rate of Canada, France, Germany, Italy, Japan, and the United
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a. Using Table 1.3, plot the inflation rate of Canada, France, Germany, Italy, Japan, and the United Kingdom against the United States inflation rate.
b. Comment generally about the behavior of the inflation rate in the six countries vis-Ã -vis the U.S. inflation rate.
c. If you find that the six countries’ inflation rates move in the same direction as the U.S. inflation rate, would that suggest that U.S. inflation “causes†inflation in the other countries? Why or why not?
Subtract from the current year’s CPI the CPI from the previous year, divide the difference by the previous year’s CPI, and multiply the result by 100. Thus, the inflation rate for Canada for 1981 is [(85.6 − 76.1)/76.1] × 100 = 12.48% (approx.).
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