The U.S. Census Bureau reported the following total manufacturing shipments for the three years from 2005 through 2007.
Manufacturing Shipments
Year ($ billions)
2005 ......... 4742
2006 ......... 5020
2007 ......... 5081
a. The CPI for 2005-2007 is given in Table 17.8. Use this information to deflate the manufacturing shipments series and comment on the pattern of manufacturers' shipments in terms of constant dollars.
b. The following Producer Price Indexes (finished consumer goods) are for 2005 through 2007, with 1982 as the base year. Use the PPI to deflate the series.
Year PPI (1982 = 100)
2005 ........ 155.8
2006 ........ 160.3
2007 ........ 166.6
c. Do you feel that the CPI or the PPI is more appropriate to use as a deflator for manufacturing shipments?