Exercises

1.1. Table 1.2 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.16

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?

TABLE 1.2 CPI IN SEVEN INDUSTRIAL COUNTRIES, 1973-1997 (1982-1984 = 100)

Year

Canada

France

Germany

Italy

Japan

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