# The Consumer Price Index and Inflation - Additional Exercises

Author(s):
Elizabeth B. Appelbaum
1. Get a table and graph of the CPI for the last 10 years from the Bureau of Labor Statistics Web site. Follow the steps on Page 2.  After selecting More Formatting Options, use the defaults: Original Data Value, Year Range Last 10 Years, and All Time Periods. Check include graphs. You get monthly data. Describe the data for the last 10 years.

2. The Bureau of Labor Statistics calculates a consumer price index for each of several regions in the United States .
1. Make a table showing the annual index for your region, all years.

2. Make a graph like Figure 7. Show the exponential trend curve with its equation and R2. You may wish to include a linear trend line.

3. Compare your graph of the index with a graph created on the Web site.

3. In your regional table from Exercise 2, calculate the natural logarithm of the CPI, as on Page 6. Graph it, as in Figure 10. Show the linear trend line in the graph, with its equation and R2.

4. In your regional table from Exercise 2, calculate inflation rates, as on Page 7. Graph them, as in Figure 12.

5. For the inflation rates for your region, get a table and graph from the Web, as on Page 7.

6. The Bureau calculates an index for each of several items. Make a table and graph on the Web site, as on Page 9, to show the 12-month percent changes in price of medical care for the last 10 years. Also get the table and graph for the 12-month percent changes in the general CPI for the last 10 years. How does inflation for medical care compare with the general CPI?

7. What is the average inflation rate from 1970 to 2002? Round your answer to one decimal place.  In Exercise 1 you got monthly values for the CPI. What is the most recent value? Use it to estimate the CPI for the current year.  Use your table from Page 7 to get the CPI for the year 1990. What is the average inflation rate from 1990 to the present?

8. From your table on Page 7 find the CPI for the years 1992 and 2002. If your salary in 1992 was $5000/month, what monthly salary in 2002 would be equivalent? Calculate and round your answer to the closest cent. Then check with the calculator at the Bureau of Labor Statistics Web site. 9. In Exercise 8 you estimated the CPI for the current year and found the CPI for 1990. What monthly salary now is equivalent to a monthly salary of$6000 in 1990? Calculate -- then check with the calculator on the Web site.

10. If you attend a college or university, find the tuition and fees for the most recent year available and for 10 years ago. Calculate what amount now is equivalent to the tuition and fees 10 years ago. Check by using the inflation calculator on the Web site. Are tuition and fees at your college greater than what you would expect from general inflation?

11. The Consumer Price Index is tied to payments for Social Security and some other pensions. Adjustments in the pension payments are called Cost of Living Adjustments (COLA). Write a paragraph or two explaining the relationship. You can research this topic on the Web. Use the Google search engine to search for COLA CPI.

Elizabeth B. Appelbaum, "The Consumer Price Index and Inflation - Additional Exercises," Convergence (December 2004)

## JOMA

Journal of Online Mathematics and its Applications