Effects of Inflation Look at Table 10.1 and Figure 10.7 in the text. When were T-bill rates at their highest over the period from 1926 through 2011? Why do you think they were so high during this period? What relationship underlies your answer?

      

    

      

Table 10.1 Year-by-Year Total Returns, 1926-2011 Large-Company Stocks Long-Term Government U.S. Treasury Bills Consumer Price Year Bonds Index 1926 1927 1928 1929 II.14% 37.13 43.31 -8.91 7.90% 10.36 -1.37 5.23 3.30% 3.15 4.05 4.47 -1.12% -2.26 -1.16 58 1930 1931 1932 -25.26 -43.86 -8.85 52.88 5.80 -8.04 14.11 2.27 L.15 -6.40 -9.32 -10.27 .88 31 12.98 5.88 8.22 1933 .52 1934 1935 1936 -2.34 47.22 32.80 .27 .17 .17 76 1.52 2.99 1937 1938 1939 1940 - 35.26 33.20 -91 - 10.08 -11.77 21.07 25.76 1.45 2.86 -2.78 .00 -.13 6.26 5.71 10.34 .27 .06 .04 .04 1941 1942 1943 -8.66 2.67 2.50 .14 .34 .38 .71 9.93 9.03 2.96 1944 1945 1946 1947 19.69 36.46 -8.18 5.24 2.88 5.17 38 .38 .38 .62 2.30 2.25 18.13 4.07 -1.15 1948 1949 1950 1951 5.10 18.06 30.58 24.55 8.84 2.99 -2.07 5.93 2.10 7.02 1.06 1.12 1.22 1.56 -1.44 -3.53 1952 1953 1954 18.50 - 1.10 52.40 1.82 - 88 7.89 1.75 1.87 .93 6.00 .75 .75 1955 1956 31.43 6.63 - 1.03 -3.14 1.80 2.66 -.74 37 2.99