For data to use in these exercises, go to the Federal Reserve Bank of St. Louis FRED database at research.stlouisfed.org/fred. Download Consumer Price Index For All Urban Consumers: All Items in U.S. City Average (CPIAUCSL), and Gross Domestic Product: Implicit Price Deflator (USAGDPDEFQISMEI).

1)Calculate the annual CPI inflation rate and the annual GDP deflator inflation rate since 1970 to 2020. Graph both inflation rates on the same figure. (Just hand in the graph, no need to hand in the raw data).

2)What is the CPI inflation rate and GDP deflator inflation rate in 2020? Show how you calculate each of them by hand.

3)Why do they look different? What are the conceptual differences between these two measures of inflation?