Some economists have thought that the money supply plays an important role in economic activity. Calculate and

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Some economists have thought that the money supply plays an important role in economic activity. Calculate and plot the 12-month growth rates in M1 (a measure of the money supply) and 12-month growth rates in real GDP.

(a) Are growth in real GDP and in the money supply positively correlated or negatively correlated?

(b) Does one time series lead the other, or are they coincident?

Answer the question using the Federal Reserve Bank of St. Louis’s FRED database, accessible at http://research.stlouisfed.org/fred2/

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Macroeconomics

ISBN: 978-0134472119

6th Edition

Authors: Stephen D. Williamson

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Question Posted: Feb 21, 2020 10:07 AM

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Some economists have thought that the money supply plays an important role in economic activity. Calculate and

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ANSWER a The growth in real GDP and the mo...View the full answer

Macroeconomics

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