The Peanuts comic below motivated parts a) and b) of this question - as you may know, Charles Shulz was the creator of peanuts and wrote the strip for nearly 50 years. This comic appeared in the paper in August of 1972.

a)(5 points) Snoopy mentions that cookies are 49 cents referring to the price of cookies back in August of 1972.Using the CPI data below, calculate what the real price of cookies, in terms of 1982-1984 dollars (this is in base period prices).

CPI https://fred.stlouisfed.org/series/CPIAUCSL (using this link to find data)

b)(5 points) Now do the same exercise as above, but instead of using the CPI price index, use the Personal Consumption Expenditure price index (below). That is, what is !the real price of cookies now using the PCE price index? Why it so different than your answer in part a) above?

PCE Price Index https://fred.stlouisfed.org/series/PCEPI ((using this link to find data)

)

c)(5 points) Using the CPI and the most recent data, what would the price of cookies need to be now to equal the same real price as 49 cents was in August 1972? Please take answer to 2 decimal places.

d) (5 points) Use the MW link below to answer d) and e) What is the rate of inflation between 1974 and 1975? (please take the inflation rate to two decimals)

Click Here www.infoplease.com/ipa/A0774473.html for data on the MW

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