Assignment
1. Table 1.2 gives data on the Consumer Price Index (CPI) for seven industrialized countries with 1982-1984 =100 as the base of the index.
a. From the given data, compute the inflation rate for each country.
b. Plot the inflation rate for each country against time (i.e. use the horizontal axis for time and the vertical for the inflation rate.)
c. What broad conclusions can your draw about the inflation experience in the seven countries?
d. Calculate descriptive statistics and explain which country's inflation rate seems to be most variable?
Hint: inflation rate = ((Pt-Pt-1)/Pt-1); For variability compare the values of variance (standard deviation) or coefficient of variation.
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Table 1.2
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CPI in seven industrialized countries, 1973-1997, (1982-1984=100)
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Canada France Germany Italy Japan UK US
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Canada
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France
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Germany
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Italy
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Japan
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UK
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US
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1973
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40.8
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34.6
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62.8
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20.6
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47.9
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27.9
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44.4
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1974
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45.2
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39.3
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67.1
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24.6
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59
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32.3
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49.3
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1975
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50.1
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43.9
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71.1
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28.8
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65.9
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40.2
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53.8
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1976
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53.9
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48.1
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74.2
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33.6
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72.2
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46.8
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56.9
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1977
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58.1
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52.7
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76.9
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40.1
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78.1
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54.2
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60.6
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1978
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63.3
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57.5
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79
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45.1
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81.4
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58.7
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65.2
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1979
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69.2
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63.6
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82.2
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52.1
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84.4
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66.6
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72.6
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1980
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76.1
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72.3
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86.7
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63.2
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90.9
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78.5
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82.4
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1981
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85.6
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81.9
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92.2
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75.4
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95.3
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87.9
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90.9
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1982
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94.9
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91.7
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97.1
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87.7
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98.1
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95.4
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96.5
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1983
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100.4
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100.4
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100.3
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100.8
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99.8
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99.8
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99.6
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1984
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104.7
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108.1
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102.7
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111.5
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102.1
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104.8
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103.9
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1985
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109
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114.4
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104.8
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121.1
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104.1
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111.1
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107.6
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1986
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113.5
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117.3
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104.7
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128.5
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104.8
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114.9
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109.6
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1987
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118.4
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121.1
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104.9
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134.4
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104.8
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119.7
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113.6
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1988
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123.2
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124.4
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106.3
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141.1
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105.6
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125.6
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118.3
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1989
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129.3
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128.7
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109.2
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150.4
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108.1
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135.3
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124
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1990
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135.5
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133
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112.2
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159.6
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111.4
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148.2
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130.7
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1991
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143.1
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137.2
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116.3
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169.8
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115
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156.9
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136.2
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1992
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145.3
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140.5
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122.1
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178.8
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116.9
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162.7
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140.3
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1993
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147.9
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143.5
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127.6
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186.4
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118.4
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165.3
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144.5
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1994
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148.2
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145.8
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131.1
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193.7
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119.3
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169.4
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148.2
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1995
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151.4
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148.4
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133.5
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204.1
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119.1
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175.1
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152.4
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1996
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153.8
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151.4
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135.5
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212
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119.3
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179.4
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156.9
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1997
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156.3
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153.2
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137.8
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215.7
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121.3
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185
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160.5
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