33. The index number representing the price level changes from 110 to 115 in one year, and then from 115 to
120 the next year. Since the index number increases by five each year, is five the inflation rate each year?
Is the inflation rate the same each year? Explain your answer.
34. The total price of purchasing a basket of goods in the United Kingdom over four years is: year 1=£940,
year 2=£970, year 3=£1000, and year 4=£1070. Calculate two price indices, one using year 1 as the base
year (set equal to 100) and the other using year 4 as the base year (set equal to 100). Then, calculate the
inflation rate based on the first price index. If you had used the other price index, would you get a different
inflation rate? If you are unsure, do the calculation and find out.
35. Within 1 or 2 percentage points, what has the U.S. inflation rate been during the last 20 years? Draw a
graph to show the data.