2. The Wilshire 5000 stock market index measures the total dollar value of a large set of stocks traded on the stock market.

The real value of the Wilshire 5000 index, which measures the real value of the wealth represented by that set of stocks, is obtained by dividing the index by a measure of the price level, such as the CPI. (To obtain monthly data on the Wilshire 5000, use WILL5000PR in the FRED database.)

Using monthly data for the period since 1971, graph the real value of the Wilshire 5000 stock market index. What striking difference do you see in comparing the values in the 1970s with the values in the rest of the period? According to the theory, what effect should the behavior of stock market wealth during the 1970s have had on the household saving rate during that period, relative to the 1980s and 1990s?