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Assignment
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.
b. Plot the inflation rate for each country against time (i.e. use the horizontal axis for time and the vertical for the inflation rate.)
c. What broad conclusions can your draw about the inflation experience in the seven countries?
d. Calculate descriptive statistics and explain which country's inflation rate seems to be most variable?
Hint: inflation rate = ((Pt-Pt-1)/Pt-1); For variability compare the values of variance (standard deviation) or coefficient of variation.
Table 1.2
CPI in seven industrialized countries, 1973-1997, (1982-1984=100)
Canada France Germany Italy Japan UK US
Canada
France
Germany
Italy
Japan
UK
US
1973
40.8
34.6
62.8
20.6
47.9
27.9
44.4
1974
45.2
39.3
67.1
24.6
59
32.3
49.3
1975
50.1
43.9
71.1
28.8
65.9
40.2
53.8
1976
53.9
48.1
74.2
33.6
72.2
46.8
56.9
1977
58.1
52.7
76.9
40.1
78.1
54.2
60.6
1978
63.3
57.5
79
45.1
81.4
58.7
65.2
1979
69.2
63.6
82.2
52.1
84.4
66.6
72.6
1980
76.1
72.3
86.7
63.2
90.9
78.5
82.4
1981
85.6
81.9
92.2
75.4
95.3
87.9
1982
94.9
91.7
97.1
87.7
98.1
95.4
96.5
1983
100.4
100.3
100.8
99.8
99.6
1984
104.7
108.1
102.7
111.5
102.1
104.8
103.9
1985
109
114.4
121.1
104.1
111.1
107.6
1986
113.5
117.3
128.5
114.9
109.6
1987
118.4
104.9
134.4
119.7
113.6
1988
123.2
124.4
106.3
141.1
105.6
125.6
118.3
1989
129.3
128.7
109.2
150.4
135.3
124
1990
135.5
133
112.2
159.6
111.4
148.2
130.7
1991
143.1
137.2
116.3
169.8
115
156.9
136.2
1992
145.3
140.5
122.1
178.8
116.9
162.7
140.3
1993
147.9
143.5
127.6
186.4
165.3
144.5
1994
145.8
131.1
193.7
119.3
169.4
1995
151.4
148.4
133.5
204.1
119.1
175.1
152.4
1996
153.8
212
179.4
1997
156.3
153.2
137.8
215.7
121.3
185
160.5
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