Assignment:
Instructions:
It is designed to give you an idea of what the measurements we talked about in class look like in reality. You can use whatever software you are comfortable with to finish the assignment.
Submission:
You can discuss with your classmates, but you must finish the project individually and submit the following to me:
1. Nominal GDP, seasonally adjusted, at quarterly frequency;
2. Real GDP, seasonally adjusted, at quarterly frequency;
3. Real domestic investment, seasonally adjusted, at quarterly frequency;
4. Real consumption expenditure, seasonally adjusted, at quarterly frequency;
5. Real government expenditure, seasonally adjusted, at quarterly frequency;
6. Real net export, seasonally adjusted, at quarterly frequency;
7. CPI for all urban consumers, seasonally adjusted, at quarterly frequency;
Use the following graphs and answer the following questions.
1. Plot the graph of real log GDP and nominal logGDP. What's difference between these two measurements of GDP? Which one do you think is a better measurement of production capacity of a country? Why?
2. Reproduce the graph on Slide 16 of Measurement .
3. Reproduce the graph on Slide 17 of Measurement.
4. Plot the graph of implicit GDP deflator constructed from nominal GDP and real GDP.
5. Use the implicit GDP deflator in 4 and the CPI downloaded from FRED to construct inflation rate respectively. Plot these two inflations in one graph. Roughly, which one is higher? Which one fluctuates more?