Calculating and categorizing inflation This table indicates the historical level of the Consumer Price Index (CPI) for the United States for 2006,2007, and 2008. Complete the table by (1) selecting the inflation rates for 2007 and 2008, and (2) indicating for each year whether there has been inflation, deflation, or hyperinflation. Year    CPI      Inflation rate   Change in Price Level 2006   201.6 2007   207.3 2007   215.3 What rates of inflation for 2009 would be consistent with disinflation between 2008 and 2009? Check all that apply. 13.9% 3.7% 3.9% 3.8% What rates of inflation for 2009 would be consistent with hyperinflation ? Check all that apply. 100.0 % -3.9% 120.0% 15.0%

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Calculating and categorizing inflation

This table indicates the historical level of the Consumer Price Index (CPI) for the United States for 2006,2007, and 2008.

Complete the table by (1) selecting the inflation rates for 2007 and 2008, and (2) indicating for each year whether there has been inflation, deflation, or hyperinflation.

Year    CPI      Inflation rate   Change in Price Level

2006   201.6

2007   207.3

2007   215.3

What rates of inflation for 2009 would be consistent with disinflation between 2008 and 2009? Check all that apply.

13.9%

3.7%

3.9%

3.8%

What rates of inflation for 2009 would be consistent with hyperinflation ? Check all that apply.

100.0 %

-3.9%

120.0%

15.0%

 

Expert Solution
Step 1

Answer:

The formula of inflation using CPI is given below:

 

Inflation=CPI1-CPI0CPI0×100Where,CPI0=CPI of previous yearCPI1=CPI of current year

Year CPI Inflation rate Change in the price level
2006 201.6 -  
2007 207.3 207.3-201.6201.6×100=2.83% The price will increase (there will be inflation) and will be 2.83% more than the year 2006
2008 215.3 215.3-207.3207.3×100=3.86% The price will increase (there will be inflation) and will be 3.86% more than the year 2007
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