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Question: How much can a dollar buy? The buying power of a dollar changes over time. The Bureau of Labor Statistics measures the cost of a "market basket" of goods and services to compile its Consumer Price Index (CPI). If the CPI is 120, goods and services that cost $100 in the base period now cost $120. Here are the average values of the CPI for the years between 1970 and 2006. The base period is the years 1982 to 1984.
(a) Make a graph that shows how the CPI has changed over time.
(b) What was the overall trend in prices during this period? Were there any years in which this trend was reversed?
(c) In which years were prices rising fastest in terms of percentage increase? In what period were they rising slowest?
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