1. Using the FRED economic data set, collect inflation for Canada using both implicit price deflator and CPI and answer the following questions: (35 points)

1. What does the index 2015=100 mean?
2. What is the difference between two data series?
3. What was the rate of inflation in the first quarter of 2021 based on each measure? Provide an economic explanation why one is greater than the other. (Hint: you can think of relative price of consumer goods to all goods)
4. Which data is more widely used by policy makers including Bank of Canada?

Step 1 Visit FRED website (https://fred.stlouisfed.org/) and search for "consumer price index all items in Canada" in the search box. When you click on the appropriate data, you will see the time series plot of the variable. Note that on the top right of the graph there are options "edit graph". Change the variable to "quarterly data". You should also change the units to "change from year ago, index 2015." Please note, you need to download the graph by clicking on the download option on top right

Step 2 Search for the "implicit price deflator Canada" in the search box and repeat the same steps as described in step 1 for the "consumer price index all items in Canada