Assignment:
Instructions:
1. In most cases responses to each question, including sub-questions must not exceed three paragraphs.
2. When Analyzing graphs, please use the following instructions as a guide:
a. Graphs are required for all questions that ask for graphs to be plotted. Once the graph is prepared, you need to copy it and paste it in the word document where your comments and responses will be written. One way to copy the graph is to do a print screen by displaying the graph on your monitor and pressing on the print screen button labeled as (Prt Scr/Sys Rq) on your keyboard. Once you hit the button, paste the graph in a word document where the responses to the questions are written.
b. It is good practice to start the analysis of a graph by stating the variable being analyzed and the period of observation for the analysis.
c. Provide a brief statement about the general trend of the lines on the graph.
d. Comment on any specific and unusual features of the graph. For example, sudden and steep rises and falls must be noted and possible reasons for the change may be offered.
e. Changes in the variables during recessionary periods must also be noted.
3. Each Graph must be labeled with the following:
a. Figure #
b. Title: Example - Labor Force Participation Rates for Men and Women Since 1960
c. Source: The Source of the data will be stated at the bottom of the Graph. If it does not show on the "Print Screen" copy, write it as follows in your word document: Source: Example - U.S. Bureau of Economic Analysis
4. Refrain from searching for the responses to the questions on the internet. Information needed to answer practically all the questions in this exercises can be found either on the graphs and/or in the required text.
5. Points will be deducted for poor sentence structures, spelling mistakes and failure to follow instructions.
6. Please note that, unless otherwise stated, the period of observation for all graphs January 1965 to December 2014.
This week's lesson will examine how economists define and measure Real GDP. The chapter describes the determinants of total output, explains the various ways that total output is measured and draws a distinction between nominal Gross Domestic Product (GDP) and real GDP. The lesson ends with a discussion of the uses of real GDP and an explanation of the limitations of GDP as a measure of the standard of living.
1. Plot the quarterly data on real GDP (FRED code: gdpc96).
a. Provide a brief description of the general performance of the output of goods and services produced in the United States. (Hint: comment on the general trend in the performance of Real GDP from 1965 to 2007).
b. Distinguish between the approximate values of Real GDP in 1975 (Quarter 1) and 2007 (Quarter 4). In your opinion, what impact do you think the performance of real GDP over this period could have had on the economic prosperity of Americans compared to their Grandparents and Great Grandparents? Explain.
c. What is the significance of the period 2008 (Quarter 1) to 2009 (Quarter 2). (Hint: Provide a brief description of the general conditions of the economy with respect to incomes, employment, profits, financial markets, real estate markets etc).
d. Plot the rate of economic growth as the percent change from a year ago of the GDPC1 index. Describe how real GDP behaves in recessions (denoted in the FRED graph by vertical gray bars).
Hint: To transform a level data to another form, i.e. a percent change from a year ago, scroll down to the dropdown link labeled as "Edit Data Series", to change the "Units" to the desired units.
2. Plot nominal GDP (FRED code: GDP). Based on the figure showing percent change from a year ago, what is special about the behavior of nominal GDP during the financial crisis of 2007-2009 compared to previous decades?