a)For each year beginning with 1991, calculate the rate of inflation from the previous year.(15 points)

Round your answers to 1 decimal place.

Year

CPI

Inflation Rate (%) = [ CPI 2- CPI1] / CPI * 100

1990

130.7

--------------

1991

136.2

[136.2 - 130.7] / 130.7 *100 = 4.20 %=

4.2 %

1992

140.3

[ 140.3 - 136.2 ] / 136.2 * 100 =3.00%=

3.0%

1993

144.5

[ 144.5 - 140.3] / 140.3 * 100 = 2.99 %

= 2.9 %

1994

148.2

[ 148.2 - 144.5] / 144.5 * 100 = 2.56 %

=

1995

152.4

1996

156.9

1997

160.5

1998

163

1999

166.5

2000

172.2

b)What happened to inflation rates over the 1990s? Compared to 1990-1991, the inflation rates remained ...................throughout the 1990`s.

Select the right answer:

a)the same

b)higher

c)lower

As can be seen, the inflation rate in the 1990s was mostly constant, ranging between 2% and 3%.