In Figure 20.1, which compares money growth and inflation over an extended time period, is Mexico a

Question:

In Figure 20.1, which compares money growth and inflation over an extended time period, is Mexico a country above or below the 45oline? Plot since 1987 on a quarterly basis the percent change from a year ago of the consumer price index (FRED code: MEXCPIALLQINMEI) and of M1 (FRED code: MYAGM1MXM189N) in Mexico. Then download the data and calculate the averages of these inflation and money growth measures. Where would Mexico appear on Figure? Were there episodes since 1987 when Mexico was on the other side of the 45-degree line? If so, why?