1. For this question you need to access data from the Federal Reserve Bank of St. Louis FRED economic database (http://fred.stlouisfed.org). Look for quarterly data for USA for the 2005-2015 period.
2. Plot, in the same graph, the evolution of real GDP (Y) and nominal GDP ($Y). Explain why these time series are different.
3. Plot the evolution of each component of real GDP: C ("Real Personal Consumption Expenditures"), G ("Real government consumption expenditures and gross investment"), I ("Real Gross Private Domestic Investment") and NX ("Real Net Exports of Goods and Services"). Classify each of these components as pro-cyclical, counter-cyclical or a a-cyclical. Briefly describe the business cycle in USA, focusing on the 2008-2009 crisis.
4. Construct a bar-chart for the ratio of each component to GDP for the year 2010: C/Y, G/Y, I/Y, and NX/Y (hint: although not identical because of different sources, your results should be consistent with column 2 of table 3-1 in Chapter 3). Rank these components in terms of size.
5. Plot the time series for the ratio of each component to GDP from part c. Provide a brief comment on the evolution of the size of each of these components.
6. Construct a scatter-plot with Real Personal Consumption Expenditures on the vertical axis and Real GDP on the horizontal axis. Fit a linear trend. Does the data support the existence of an aggregate consumption function?

 

2. Is the goods market model consistent with the data you presented in Question 1? Explain using graphs, intuition and algebra. If you need to add additional data, feel free to do so (hint: don't discuss whether the assumptions of the model hold in reality (they don't). Focus on whether the relationship between variables implied by the model seems consistent with the data).

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