Data Analysis Problems
1. Go to the St. Louis Federal Reserve FRED database and find data on the M1 money supply (M1SL) and the 10-year Treasury bond rate (GS10). Add the twi series into a single graph by using the "Add Data Series" feature. Transform the M1 money supply variable into the M1 growth rate by adjusting the units for the M1 money supply to "Percent Change from Year AGO"
a. In general, how have the growth rate of the M1 money supply and the 10-year Treasury bond rate behaved during recessions and during expansionary periods since the year 2000?
b. In general, is there an obvious, stable relationship between money growth and the 10-year interest rate since the year 2000?
c. Compare the money growth rate and the 10-year interest rate for the most recent month available to the rates for January 2000? How do these rates compare?