Japan was the first Asian country to challenge the dominance o f the U.S. in 1980s. However, since then, its economy has been in a slow but relentless decline (The New York Times, October 16, 2010).This country has been trapped in low growth and a downward spiral of prices, known as deflation. Consider the follow ing CPI of Japan for the years 2001 through 2009. Compute and interpret the annual inflation rates in Japan in the 2000s.

Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 CPI 120.1 119.0 118.7 118.7 118.3 118.7 118.7 120.3 118.7 Source: Bureau o f Labor Statistics.