# Use the table below to answer the following questions – Data Table for Question 2DATESPRICE…

Use the table below to answer the following questions –

Data Table for Question 2DATESPRICE INDEX1974-01-0126.5741974-02-0126.8831974-03-0127.1951974-04-0127.3871974-05-0127.6571974-06-0127.8911974-07-0128.0981974-08-0128.3911974-09-0128.6871974-10-0128.8931974-11-0129.1101974-12-0129.3411975-01-0129.5231975-02-0129.6841975-03-0129.7861975-04-0129.8871975-05-0130.0071975-06-0130.1951975-07-0130.4541975-08-0130.5861975-09-0130.7371975-10-0130.9161975-11-0131.1141975-12-0131.286a) (5 points) Calculate the rate of inflation from January 1974 (1974-01-01) to January 1975 (1975-01-01).

b)(5 points) Suppose that you earned \$30,000 per year back in January of 1975. Assuming that the current price index is 109, how much money would you have to make now to have the same purchasing power as \$30,000 did back in January of 1975?

c) (5 points) In January 1974, the one year interest rate 7.01%. Calculate the ex-post real rate of interest.

d) (5 points) Given your answer in part c), is this an environment attractive to saving or spending? Explain.