Problem
Calculate the ratio of total real government purchases to real GDP, quarterly, from 1947 to 2012. Also calculate the real interest rate on a quarterly basis as a three-month Treasury bill rate minus the inflation rate. Plot these two variables as time series. The real intertemporal model predicts that a temporary increase in government spending increases the real interest rate. Do you observe anything in your chart that is consistent with that prediction? Why or why not?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.