1.In this exercise we will work with different data sets that are freely available. This question is designed to get you acquainted with some of them and guide you in answering macro-related questions.(You can expect to have to do some digging around on various websites to answer some of these questions.)

a.(4 points)FRED (https://fred.stlouisfed.org/) is a big database hosted by the Federal Reserve Bank of St. Louis that pulls together economic data from a huge variety of sources.Almost any sort of US macro data (and quite a bit of international data) you could want is there. (It's the main place I go to produce graphs for the lecture slides in this class.)We'll use some data from FRED to look at inflation.

b. Suppose something in the US cost $100 during the 3rd quarter of 1981.If the price of this thing increased only due to inflation (as measured by the GDP deflator), how much would it cost during the 4th quarter of 2020.(Equivalently, if you had $100 in 1981Q3, how much money would you need in 2020Q4 in order to be able to buy the same amount of stuff?)

Now let's do (approximately) the same thing using seasonally adjusted monthly CPI data:If something in the US cost $100 in July 1981 and its price increased only due to inflation (as measured by the CPI), how much would it cost in December 2020?