(Excel exercise) Federal Reserve bank of St. Louis (https://research.stlouis.org/fred2/) provides data on the U.S. economy. The data needed for this exercise is also available on the course Moodle under "US-CPI and Unemployment-Annual". The data set covers the period 1957-2014 for the United States.
a. Use the CPI (CPI-All) and CPI- less food and energy (CPI-LFE), to generate inflation rate for both variables. Inflation rate is defined as: Inflation = (CPI t - CPI t-1)/CPI t-1. Which measure of unemployment seems to be more variable? Why? In which periods the U.S. economy experienced high inflation rates?
b. Use the unemployment rate (URATE) and the natural rate of unemployment (URATE-N) to generate a chart showing both variables on the same diagram. What accounts for the difference between the two measures of unemployment? Identify periods of economic recession on the diagram?
c. Plot the Real GDP per capita (RGDP-PC) and its annual growth rate for this period. In which periods Americans experienced the highest growth rate in their per capita GDP? The lowest growth rates? Can you explain this?