Use the table below to answer the following questions -

Data Table for Question

2DATESPRICE INDEX

1974-01-0126.574

1974-02-0126.883

1974-03-0127.195

1974-04-0127.387

1974-05-0127.657

1974-06-0127.891

1974-07-0128.098

1974-08-0128.391

1974-09-0128.687

1974-10-0128.893

1974-11-0129.110

1974-12-0129.341

1975-01-0129.523

1975-02-0129.684

1975-03-0129.786

1975-04-0129.887

1975-05-0130.007

1975-06-0130.195

1975-07-0130.454

1975-08-0130.586

1975-09-0130.737

1975-10-0130.916

1975-11-0131.114

1975-12-0131.286

a) Calculate the rate of inflation from September 1974 (1974-09-01) to September 1975 (1975-09-01).

b) Suppose that you earned $15,000 per year back in September of 1975. Assuming that the current price index is 120, how much money would you have to make now to have the same purchasing power as $15,000 did back in September of 1975?

c) In September 1974, the one year interest rate 8.52%. Calculate the ex-post real rate of interest.

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