Practice Problems for Inflation/Interest Rates:
1. Using the CPI Data given below, calculate the inflation rate for 2004, as 2003 as the base year.
2. Using the CPI Data given below, calculate the inflation rate for 1997, as 1996 as the base year.
3. Using the CPI Data given below, calculate the price of a 1980 Whirl Pool Portable Dishwasher (that was $228.00 in 1980) in 2007 prices.
4. Using the CPI Data given below, calculate the price of a Lazy Boy Recliner $260.00 Annapolis 1993 in 2007 prices.
5. If the inflation rate is 6% and the interest rate is 9% what is the real interest rate? Who benefits from the high inflation rate?
6. If the interest rate offered on a loan is 42% and the RR is 2% and the IP is 5%; what is RP? Secondly, what is this telling you about this consumer?
7. If the CPI in 1932 was 95 and the CPI in 1933 was 90 what was the inflation rate for the year 1933? Were we fighting inflation or deflation?
Year CPI 2008 219.964 2007 208.3 2006 201.6 2005 195.3 2004 188.9 2003 184.0 2002 179.9 2001 177.5 2000 172.5 1999 166.6 1998 163.1 1997 160.5 1996 156.9 1995 152.4 1994 148.2 1993 144.5 1992 140.3 1991 136.2 1990 130.7 1989 124.0 1988 118.3 1987 113.6 1986 109.6 1985 107.6 1984 103.9 1983 99.6 1982 96.5 1981 90.9 1980 82.4 1979 72.6