CANAD FRANC GERMAN

Year ITALY JAPAN UK US

A E Y
19.4174 23.1732 15.7706 11.0360
1974
10.78431 13.58382 6.84713 8 8 1 4
17.0731 11.6949 24.4582
1975
10.84071 11.70483 5.96125 7 2 0 9.12779
16.6666 16.4179
1976
7.58483 9.56720 4.36006 7 9.55994 1 5.76208
19.3452 15.8119
1977
7.79221 9.56341 3.63881 4 8.17175 7 6.50264
12.4688
1978
8.95009 9.10816 2.73082 3 4.22535 8.30258 7.59076
15.5210 13.4582 11.3496
1979
9.32070 10.60870 4.05063 6 3.68550 6 9
21.3051 17.8678 13.4986
1980
9.97110 13.67925 5.47445 8 7.70142 7 2
19.3038 11.9745 10.3155
1981
12.48357 13.27801 6.34371 0 4.84048 2 3
16.3130
1982
10.86449 11.96581 5.31453 0 2.93809 8.53242 6.16062
14.9372
1983
5.79557 9.48746 3.29557 9 1.73293 4.61216 3.21244
10.6150
1984
4.28287 7.66932 2.39282 8 2.30461 5.01002 4.31727
1985 4.10697 5.82794 2.04479 8.60987 1.95886 6.01145 3.56112
1986 4.12844 2.53497 -0.09542 6.11065 0.67243 3.42034 1.85874
1987 4.31718 3.23956 0.19102 4.59144 0.00000 4.17755 3.64964
1988 4.05405 2.72502 1.33460 4.98512 0.76336 4.92899 4.13732
1989 4.95130 3.45659 2.72813 6.59107 2.36742 7.72293 4.81826
1990 4.79505 3.34110 2.74725 6.11702 3.05273 9.53437 5.40323
1991 5.60886 3.15789 3.65419 6.39098 3.23160 5.87045 4.20811
1992 1.53739 2.40525 4.98710 5.30035 1.65217 3.69662 3.01028
1993 1.78940 2.13523 4.50450 4.25056 1.28315 1.59803 2.99359
1994 0.20284 1.60279 2.74295 3.91631 0.76014 2.48034 2.56055
1995 2.15924 1.78326 1.83066 5.36913 -0.16764 3.36482 2.83401
1996 1.58520 2.02156 1.49813 3.87065 0.16793 2.45574 2.95276
1997 1.62549 1.18890 1.69742 1.74528 1.67645 3.12152 2.29446
A) For the given data, compute the inflation rate for each country.
b) Plot the line graph of inflation rate for each country against time (i.e., use the horizontal axis
for time and the vertical axis for the inflation rate).
25

20

15

10

-5
74 76 78 80 82 84 86 88 90 92 94 96

CANADA FRANCE GERMANY

ITALY JAPAN UK
US

c) Plot the line graph of inflation rate of Canada, France, Germany, Italy, Japan and the United
Kingdom against the United States inflation rate.
 25

20

15
UK
JAPAN
ITALY 10
GERMANY
FRANCE
CANADA 5

-5
1 2 3 4 5 6 7 8 9 10 11 12 13 14

US

d) Plot the inflation rate of United Kingdom against the United States inflation rate and comment
generally about it.

25

20

15
UK

10

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14

US

Comment: *Down-sloping (Negative relationship)

*Upward sloping (Positive relationship)
*Horizontal (X country increase but Y country remain)
 * Vertical (Y country increase but X country remain)

e) If you find that the United Kingdom inflation rates move in the same direction as the U.S.
inflation rate, would that suggest that U.S. inflation “causes” inflation in the United
Kingdom? Why or why not?

No. We cannot say that there is causes effect relationship, we only can say that there is
positive relationship.