Use the table below to answer the following questions -

Data Table for Question 2 DATESPRICE INDEX1974-01-01 26.574 1974-02-01 26.883 1974-03-01 27.195 1974-04-01 27.387 1974-05-01 27.657 1974-06-01 27.891 1974-07-01 28.098 1974-08-01 28.391 1974-09-01 28.687 1974-10-01 28.893 1974-11-01 29.110 1974-12-01 29.341 1975-01-01 29.523 1975-02-01 29.684 1975-03-01 29.786 1975-04-01 29.887 1975-05-01 30.007 1975-06-01 30.195 1975-07-01 30.454 1975-08-01 30.586 1975-09-01 30.737 1975-10-01 30.916 1975-11-01 31.114 1975-12-01 31.286.887 1975-05-01 30.007 1975-06-01 30.195 1975-07-01 30.454 1975-08-01 30.586 1975-09-01 30.737 1975-10-01 30.916 1975-11-01 31.114 1975-12-01 31.286

a) (5 points) Calculate the rate of inflation from January 1974 (1974-01-01) to January 1975 (1975-01-01).

b)(5 points) Suppose that you earned $30,000 per year back in January of 1975. Assuming that the current price index is 109, how much money would you have to make now to have the same purchasing power as $30,000 did back in January of 1975?

c) (5 points) In January 1974, the one year interest rate 7.01%. Calculate the ex-post real rate of interest.

d) (5 points) Given your answer in part c), is this an environment attractive to saving or spending? Explain.