Question

The mean annual inflation rate in the UNited States over the past 98 years in 3.37% and has a standard deviation of approx 5%. In 2018, the inflation rate was below 1.9%. If the annual inflation rate is normally distributed, what is the probability that inflation rate will be below 1.9% in 2019?

Please show all work, including step by step.

Answer 1

Answer)

As the data is normally distributed we can use standard normal z table to estimate the answers

Z = (x-mean)/s.d

Given mean = 3.37%

S.d = 5%

We need to find

P(x<1.9)

Z = (1.9 - 3.37)/5 = -0.29

From z table, P(z<-0.29) = 0.3859