From the St. Louis Fed Web site, get annual data on U.S. inflation from 1960 to the present.
a. For each decade from the 1960s through the 2000s, calculate the mean and variance of inflation over the decade. For example, calculate the mean and variance for the 10 years from 1960 through 1969.
b. Make a graph that plots the mean of inflation against the variance, with a point for each decade. What is the relation between the two variables?
c. What might explain the relation found in part (b)?