Table 1.3 gives data on the Consumer Price Index (CPI) for seven industrialized countries with 19821984 =

Question:

Table 1.3 gives data on the Consumer Price Index (CPI) for seven industrialized countries with 1982€“1984 = 100 as the base of the index.
a. From the given data, compute the inflation rate for each country.
b. Plot the inflation rate for each country against time (i.e., use the horizontal axis for time and the vertical axis for the inflation rate).
c. What broad conclusions can you draw about the inflation experience in the seven countries?
d. Which country€™s inflation rate seems to be most variable? Can you offer any explanation?

Canada Germany Italy U.K. Year U.S. Japan France 82.4 76.1 72.2 63.9 1980 91.0 86.7 78.5 81.8 91.7 1981 90.9 85.6 95.3 9

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 ˆ’ 76.1)/76.1] Ã— 100 = 12.48% (approx.).