5tG9.p+@ Fred pass code

Individual: (- = + /30

Class: (- = + /20

Total: (- = + /50

each of the questions below in the "Answer" spaces, making sure your answers appear in blue. (This will happen automatically if you answer in the correct space!outside of the answer spaces will not be marked.)

Classify each of the following topics as macro- or microeconomics related. a

1. The impact of cigarette taxes on the smoking behavi

1. The influence of the government budget deficit on economic growth. (-

1. The role of Microsoft's market power in the price of software. (-

1. Should a central bank's mandate include poverty reduction? (-

1. The euro/dollar exchange rate. (Hint: The market for dollars is a single market.) (

1. The economic fallout from the collapse of Silicon Valley Bank(-

Classify each of the following statements as positive or normative. Provide a one-sentence explanation. (1 point per question)

1. Every nation faces a trade-off between inflation and unemployment. (-

1. An increase in the rate of growth of money benefits the poor. (-

1. The Federal Reserve (the U.S. Central Bank) ought to refrain from raising interest rates again until 2023. (-

1. The $300 unemployment-insurance add-on during pandemic reduced work effort.(-

1. Too many workers have lost their jobs during the pandemic. (-

1. Reimbursing all Silicon Valley Bank depositors is necessary to prevent banking contagion, i.e., a run on banks.

FRED

The best way to learn how to use FRED is to use FRED! So complete the exercises described below, where your final product for #3 is a time-series line (not bar!) graph of the ratio of the U.S. government annual budget deficit or surplus to GDP (gross domestic product) through 2021. And your final product for #4 and #5, a time-series graph of the ratio of total U.S. government debt to GDP through 2022. In addition to copying each of your completed graphs into the designated spaces below, make sure you answer each of the questions shown in bold as well. (Note:while not necessary, if you wish, you can check out a video posted in the Week 1 Content Module of our course webpage that shows you how to do this as well.)

(a) Go to FRED by typing into your browser the following address:

https://fred.stlouisfed.org/

In the search bar that appears, type in "federal deficit or surplus annual" and hit the return key. Note that you'll have more than one option. Click on the heading "Federal Surplus or Deficit (-) /Millions of Dollars, Annual, Not Seasonally Adjusted," the first entry. When you do, the series code "FYFSD" should appear next to the title of the series along with a time series graph of annual data since 1901. Note that these data are for the fiscal year, October 1 - September 30.

By simply running the cursor over any point on the graph you can read off the surplus or deficit number for that (fiscal) year. A positive number is a surplus, meaning that the government collects more tax revenue than it spends in a given year. And a negative number is a deficit, meaning that the government spends more on government purchases of goods and services than it collects in taxes. Note that these data are expressed in millions of dollars. For example, the fiscal year 1985 figure of (-)$212,308 is read as a deficit of $212,308 million or $212.308 billion dollars. (Try it!) In other words, "212 thousand 308 million dollars" = $212.308 billion dollars, since 1 (U.S.) billion = 1000 million.

1. Eyeing the graph and placing the cursor over the relevant period, identify the year that the federal government ran its largest fiscal-year budget deficit? And what was this number, expressed in millions of dollars? (Use all digits shown.) (Note: do not print out this graph!)
2. What is the value of your answer to (i) in billions of dollars? (Include all decimal points.) And in trillions of dollars? (Round to three decimal points.) (Note:1 U.S. trillion = 1000 U.S. billion.)(

(b) The data series that you graphed in (a) is a raw number. A much more meaningful measurement is the deficit (or surplus) expressed as a ratio of the value of our nation's total output, GDP (gross domestic product) which, as we'll see next week, is essentially the same as our nation's total income.

So let's use FRED to graph this ratio. How? First, remember that we're calculating the ratio of the government's annual budget deficit to GDP. So we must now call up the annualGDP series.

With your graph created in (a) on the screen, click on the "EDIT GRAPH" key, found in the upper right-hand corner, just below the "DOWNLOAD" key.Note that when you do so you are by default in the "EDIT LINE 1" option shown by the highlighted option in the toolbar, which includes "ADD LINE" and "FORMAT."

In "EDIT LINE 1" you can choose to modify the units by clicking on "Units" and/or the frequency by clicking on "Modify frequency." Here, we wish to use the next alternative, "Customize Data."

Three lines below the "Customize Data" heading, you'll find "You can begin by adding a series to combine with your existing series." And right below, you'll find another dialog box that reads "Select."Type "GDPA" into the dialog box and then place the cursor over the "Gross Domestic Product, Billions of Dollars, Not Seasonally Adjusted" (series name, "GDPA") option that should be your first and only choice. Then clickon this "GDPA" series so that its title "Gross Domestic Product" now appears in the dialog box, and then clickon the "ADD" button, located to the right of the box. (Again, to review, you must first click on the "Gross Domestic Product" series so that its name appears in the dialog box, and then click on the "Add" button.)

You now have two series to work with. The first, "Federal Surplus or Deficit (-), Millions of Dollars, Not Seasonally Adjusted (FYFSD)," which you graphed in (a), is now labeled series "(a)"; the second, "Gross Domestic Product, Billions of Dollars, Not Seasonally Adjusted Annual Rate (GDP)" which you just added, is now labeled series "(b)."Note that the second series begins in 1939, so our transformation will only include data from that year on.

So how do we compute the ratio of series (a) to series (b), i.e., a/b?First, keep in mind that we must make sure that the units of each are the same. Note that the GDP data are expressed in billions of dollars, while the federal surplus or deficit data are expressed in millions of dollars. To convert the federal deficit data (series (a)) to billions of dollars, we simply divide this number by 1000. Why? Since 1000 million = 1 billion, 1 million = 1 billion / 1000, i.e. divide both sides by 1000.

So to correctly compute the ratio of the (fiscal year) government deficit or surplus to GDP in percentageterms, we need only the following expression: "(a/1000)/b*100", which is what we'll enter into the "Formula" box, located just below the "Now create a custom formula to combine or transform the series" directive. Remember that "a" and "b" are the series of interest.

So enter "(a/1000)/b*100" into the "Formula" box and hit the "Apply" key.*(You do not enter the quotation marks. I use these to show you what you should enter. Do enter the parentheses, however.) Note: in this case, you do not need to enter the parentheses. However, it's a good idea to use them so as to remember what you're doing.

You now have a new annual (fiscal-year) series, which is the ratio of the federal government surplus or deficit to the nation's GDP. While not completely congruent, since we're using calendar-year GDP and fiscal-year budget surplus or deficit data, this is how these numbers are shown, which, by the way, you sometimes hear about on the news) (Note: you can check your work by calling up the series "FYFSGDA188S," which uses the exact same method to compute it.)

1. Paste a copy of this graph belowby clicking on "Download/Image (Graph)/Edit/Copy" to upload the graph. Then click on "Paste" to copy it into the space belowand submit it as part of this exercise. (All students mustuse this option.) (2.0 points) (-

Note: You might wish to save this graph for future reference by clicking on the "ACCOUNT TOOLS" button at the bottom of the graph. You can name the graph and create a "Category," i.e., folder, (e.g., "ECON 201 Exercise 1") for it as well. (You can even create "Sub-Categories," e.g., "Week 1," and so on. This is all optional, however.)

Answer: (Insert graph here)

1. How would you describe in general the evolution of this measurement since the 1950s?

1. What was the maximum (negative) value of this ratio during the Great Recession from 2007-2009? What is the value of this ratio for 2022? (In both cases, round to two decimal places.)(1 point)(-

FRED Work (total federal debt to GDP ratio)

So we'll now graph directly the ratio of total federal government debt (not the annual deficit, but the accumulated debt) to GDP, calculated on a quarterly basis, from the beginning of the series (Q1 1966) through the last data entry, Q4 2022).

Start off by entering "Federal Debt: Total Public Debt as Percent of Gross Domestic Product" into the FRED title page dialog box. Click on the one choice that appears, which has the same name as that which you just entered. Voil, you've now produced the final product. Yes, it's that simple sometimes. (Note: by running the cursor over the series you graphed, you'll see that you can read off the value each each quarter since Q1 1966 through the last data point.

(i))

(ii) What is the percentage of debt to GDP for Q4 2022? (Round to two decimal places.) (1 point)(-

1. How would you describe the evolution of this series during and after the Great Recession of 2008-2009?(1 point)(-

1. Compute the percentage increase in this measure from Q1 2020 to Q2 2020. Use all decimals in the values given to compute yourfinal answer, which you must round to one decimal place.

Reminder: How do you calculate a percentage change?

(new value - old value) / (old value) * 100 = (new value / old value - 1) * 100

FRED Work (federal debt (held by the public)-to GDP ratio)

So we'll now graph directly the ratio of federal government debt held by the public to GDP from the beginning of the series (Q1 1970) through the latest entry available (Q4 2022). This figure is the value of all federal debt held by individuals, state or local governments, Federal Reserve banks, and so on. It does not include the debt issued by the U.S. Treasury held by other government agencies (e.g., Social Security Administration). And is composed primarily of Treasury bills (maturity dates of 1-, 2-, 3-, 6-, and 12 months), Treasury notes (maturity dates of 2-, 3-, 5-, 7-, and 10 years), and Treasury bonds (maturity dates of 30 years).

Start off by typing "Federal Debt Held by the Public as Percent of Gross Domestic Product" into a new search box. Click return. Then choose the correct series, "Federal Debt Held by the Public as Percent of Gross Domestic Product, Percent of GDP, Quarterly, Seasonally Adjusted" which should be the first one

(i) Print OUT your graph it by clicking on the "Download" key and choosing either the "Image" option as explained in questions #3 and #4. Submit your printed graph as part of this exercise, copying and pasting it into your Word-produced answer sheet in the space below. (All students mustuse this option.) (1 point)(-

(Insert graph here)

(ii) What is the percentage of debt to GDP for Q5 2022? (Round to 2 decimal places.)

(iii) Between Q4 2019 and Q4 2020, by what percentage did this measure increase? (Use all digits in the numbers to compute your answer, which you must round to 2 decimal places.) (2 points)(-

(iv) Compute the percentage change in the total public debt as a percent of GDP ratio for the period Q1 2020, to Q2 2020. Again, use all the digits from the numbers to calculate your answer. But round your answer to one decimal place.

(v) So thinking about the definitions of the two debt/GDP measurements you worked with in question #4 and question #5, and reviewing your two answers for the growth rate between 2007 to 2013, and 2019 to 2020, which of these two measurements makes the most sense to you? That is, does it make more sense to define the government's debt-to-GDP ratio using total federal debt, as in question #4, or federal debt held by the public, as in question #5. If you think this is an irrelevant issue, think again. Journalists often cite one or the other without knowing what either measures. As you see, the difference between the two is substantial.)(1 point) (-