Use the CPI table on page 170 in your textbook to assist with this problem.

a.Calculate the rate of inflation from 1986 to 2019. Express your answer as a percentage rounded to one decimal place. Note: Use a CPI of 255.8 for 2019 since it is not in the table.

b.If the median household income increased with inflation, what would the median household income have been in 2019?

c.When discussion how wages change over time, why is it important to adjust for inflation?

TABLE 3.4 Average Annual Consumer Price Index (1982-1984 = 100) Year CPI Year CPI Year CPI Year CPI 1977 60.6 1987 113.6 1997 160.5 2007 207.3 1978 65.2 1988 118.3 1998 163.0 2008 215.3 1979 72.6 1989 124.0 1999 166.6 2009 214.5 1980 82.4 1990 130.7 2000 172.2 2010 218.1 1981 90.9 1991 136.2 2001 177.1 2011 224.9 1982 96.5 1992 140.3 2002 179.9 2012 229.6 1983 99.6 1993 144.5 2003 184.0 2013 233.0 1984 103.9 1994 148.2 2004 188.9 2014 236.7 1985 107.6 1995 152.4 2005 195.3 2015 237.0 1986 109.6 1996 156.9 2006 201.6 2016 240.0