Lab 8
1.
a. The inflation data comes from the World Bank.
b. The earliest inflation rate is 1.45798% from the year 1960.
c. Seeing the InflationData, the inflation rate was increasing (with some dips) from 1960
until in the late 1970s and the inflation rate was the highest at 1980. After 1980, the
inflation rate decreased by a lot and there’s a big spike in 2022.
d. Yes, the plot matches what we see on the FRED site.
e. See graph
2.
a. The prices go from 10 to 15, 20 to 26, and 30 to 45.61.
b. The new price would be p+(p*i/100).
c. The inflation rate in the year 2000 was 3.3768573%. At the end of the year 2000, the
good and service would cost p+(p*.033768573).
d. At the start of 2000, the average price of gas was $1.26 per gallon. At the end of 2000,
the price of gas was $1.41 per gallon. The price of gas increased more than the rate of
inflation, which led gas to become more expensive.
e. The price went from $1.44, to $1.57. This reflects inflation of ~9%. Since overall inflation
was a little over 3%, this means tomatoes got relatively more expensive.
f. Because inflation is designed to capture price changes of an entire market, and the price
of an individual good may see big changes based on factors specific to that good. For
example, if there was an increase in the quality of oranges, that price would increase by
some amount. This doesn’t hold much weight in inflation because it does not reflect a
change in market factors.
3.
a. The new price for a 30% increase is p+(0.30 x p) = 1.30p and for the 10% increase on
the new price of 1.30p would be 1.30p + (0.10 x 1.30p) = 1.30p x 1.10 = 1.43p.
b. The inflation rate in the year 2001 is 2.8261711%. If a good or service costs p dollars at
the beginning of 2000 and the price kept up with inflation, the same good or service
would cost 1.064p dollars because p x (1+0.034) = 1.034p after 2000, and 1.034p x
(1+0.028) = 1.064p.
c. At the end of 1960, the goods would cost $1.015, then $1.025 for 1961, $1.038 for 1962,
and $1.051.
d. Yes, the first few values match with what I calculated above. These are the values,
1960: 1.015, 1961: 1.025,1962: 1.038, 1963: 1.051, which match up with the values.
e.
f.
Yes the graph does match up with the one we made.
g.
This plot is fairly similar to the one we made in part 3e, however, it now has a slightly
steeper slope. Additionally, the units of the y-axis have shifted from “Price” to “CPI” and
now range from 50-300. These differences occur because unlike the other graphs, which
plot the change in price of a particular good, this graph plots the change of an entire
market basket of consumer goods (CPI).
h. The differences that I notice between this plot and the plot from part 3e is that the graph
in part 3e shows the actual cost of goods over time by inflation, while this plot shows the
antiderivative of inflation rate over a period of time. Also, this plot seems to be like the
opposite of the one in 3e because in this plot, the slope of the graph starts off very steep,
and then at around 1980, the slope becomes less steep, at a somewhat constant rate.
i.
j.
k. This compares to our plot from part 3e because it has the same slope and graph of the
one in 3e, which are both exponentially rising. They both show the actual cost of the
products due to inflation over time as well. The command in part 3h shows the
antiderivative, which is converted to log levels.
Wrap-Up:
This week's lab was very straightforward and relatively uncomplicated, as it primarily involved
the analysis of various economic data sets. We had a slight difficulty rearranging the calculated
integral to fit in terms of dt, however, this issue was clarified and resolved with the help of the
TA. It took around two and a half hours to complete this assignment.