THEMATICS OF FINANCE 5. Table 3.17 shows government expenditure (in billions of dollars) on education for four consecutive years, together with the rate of inflation for each year. (a) Taking Year 1 as the base year, work out the index numbers of the nominal data given in the third row of the table. (b) Find the values of expenditure at constant Year 1 prices and hence recalculate the index numbers of real government expenditure. (c) Give an interpretation of the index numbers calculated in part (b). Table 3.17 Year 1 2 3 4 276 236 Spending Inflation 210 4.7 267 4.2 3.4