1. Compute the inflation rate for each year (1988-1989, 1989-1990, 1990-1991, 1991-1992 etc.) using the CPI data for 1988-2006 in the table above. Show your work.
2. Which years were years of inflation? What would you expect to happen to real interest rates during this time period if nominal rates remained unchanged?
3. In which years did deflation occur? What would you expect to happen to real interest rates during this time period if nominal rates remained unchanged?
4. In which years did disinflation occur?

Year CPI Year CPI Year CPI Year CPI 1988 125.8 1993 152.0 1998 160.5 2003 191.5 1989 131.5 1994 155.7 1999 174.1 2004 196.4 1990 137.5 1995 159.9 2000 179.7 2005 202.8 1991 143.7 1996 164.4 2001 184.6 2006 209.3 1992 147.5 1997 168.0 2002 187.4