Inflation 2011 The Consumer Price Index (CPI) tracks the

Problem 47E

Inflation 2011 The Consumer Price Index (CPI) tracks the prices of consumer goods in the United States, as shown in the following table. The CPI is reported monthly, but we can look at selected values. The table shows the January CPI at five-year intervals. It indicates, for example, that the average item costing $17.90 in 1926 cost $220.22 in the year 2011.

a) Make a scatterplot showing the trend in consumer prices. Describe what you see.

b) Be an economic forecaster: Project increases in the cost of living over the next decade. Justify decisions you make in creating your model.

                                                               Step by Step Solution

Step 1 of 5

Given:

The Consumer price index (CPI) is reported for different years and is provided as,

Table (1)