Homework

Round 2

• Download the raw data in the Excel file entitled Class Homework 2 data.xlsx.
• Reindex all consumer and producer price indices to set 1959 Q1 as the base period for the index.
• Calculate the nominal value of GDP using the money supply (M2) and velocity (M2V).
• Calculate the real (inflation adjusted) value of the GDP using the consumer price index for the 1959 Q1 base period.
• Calculate indices for the money supply (M2), Nominal GDP and Real GDP using 1959 Q1 as a base period
• Create line charts showing each of the following:
  • Nominal and Real GDP (Exhibit 1)
  • The indices of the money supply, nominal and real GDP using 1959 Q1 as the base year (Exhibit 2)
  • Format the charts completely in black and white. Use different dash types (i.e., solid versus dotted) to differentiate the lines on the chart. Include a legend at the bottom of the chart that identifies each line type.
  • Complete the descriptive titles as per the guidelines for formatting an exhibit.
• Be able to explain the identity of each element in each of the two charts.
• Be able to provide a description of the behavior of each element in each of the two chart.
• Write out a one-to-two sentence answer to each of the following questions.
  • At what points does the relationship between real and nominal GDP appear to change?
  • What economic conditions were present at the time of these changes?
  • To what degree has expansion of the money supply created both nominal and real economic growth over the time period covered by the chart?
  • Has this changed over time?
  • What do these findings imply about the current state of the economy?
  • Whatdothesefindingsimplyabouttheeffectivenessofmonetarypolicyincreatingeconomicgrowth?
  • There are two parts, will attach both.

Money Supply, Monetary Base, Consumer Price Index, Producer Price Indices for All Commodities, Finished Con Price Index for Food at Home Quarterly from 1959 through 2016 (III) Money Supply (M2) ($MMM) Quarter 1959-01-01 1959-04-01 1959-07-01 1959-10-01 1960-01-01 1960-04-01 1960-07-01 1960-10-01 1961-01-01 1961-04-01 1961-07-01 1961-10-01 1962-01-01 1962-04-01 1962-07-01 1962-10-01 1963-01-01 1963-04-01 1963-07-01 1963-10-01 1964-01-01 1964-04-01 1964-07-01 1964-10-01 1965-01-01 1965-04-01 1965-07-01 1965-10-01 1966-01-01 1966-04-01 1966-07-01 1966-10-01 1967-01-01 1967-04-01 1967-07-01 1967-10-01 1968-01-01 1968-04-01 1968-07-01 1968-10-01 1969-01-01 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 288.50 291.00 295.10 298.40 299.40 300.00 305.50 312.30 317.10 321.00 326.50 334.70 341.20 346.20 351.60 361.30 369.00 374.60 382.20 392.50 398.70 403.00 412.00 423.70 431.50 436.10 444.60 457.80 465.60 468.60 471.70 479.60 486.00 495.70 509.70 523.00 530.50 538.20 549.00 563.60 571.80 Velocity of Money (M2V) 1.776 1.794 1.774 1.781 1.819 1.802 1.782 1.740 1.726 1.730 1.735 1.745 1.749 1.734 1.728 1.704 1.692 1.681 1.682 1.675 1.688 1.684 1.676 1.655 1.671 1.674 1.682 1.696 1.716 1.717 1.735 1.748 1.743 1.712 1.697 1.694 1.718 1.737 1.733 1.725 1.741 St. Louis Adjusted Monetary Base ($MMM) $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 38.62 38.76 39.22 39.54 38.85 38.78 39.34 40.03 39.50 39.46 40.12 41.12 40.77 41.10 41.72 42.60 42.39 42.83 43.76 44.83 44.71 45.21 46.23 47.36 47.29 47.72 48.71 50.11 50.21 50.77 51.63 52.48 52.67 53.20 54.33 55.76 55.99 56.66 57.98 59.55 59.76 Consumer Price Index (CPI) (8284=100) 28.933 29.033 29.233 29.400 29.367 29.533 29.600 29.800 29.800 29.800 29.967 30.000 30.067 30.200 30.333 30.400 30.433 30.533 30.700 30.833 30.900 30.933 31.067 31.167 31.233 31.467 31.600 31.733 31.967 32.333 32.633 32.900 32.933 33.200 33.500 33.800 34.200 34.533 35.000 35.400 35.833 Producer Price Index for All Commodities (1982=100) 31.7 31.8 31.7 31.5 31.7 31.7 31.6 31.7 31.8 31.5 31.5 31.5 31.7 31.5 31.7 31.7 31.5 31.5 31.6 31.6 31.7 31.5 31.6 31.7 31.9 32.2 32.4 32.6 33.1 33.2 33.6 33.3 33.4 33.3 33.4 33.5 34.0 34.2 34.3 34.5 35.0 1969-04-01 1969-07-01 1969-10-01 1970-01-01 1970-04-01 1970-07-01 1970-10-01 1971-01-01 1971-04-01 1971-07-01 1971-10-01 1972-01-01 1972-04-01 1972-07-01 1972-10-01 1973-01-01 1973-04-01 1973-07-01 1973-10-01 1974-01-01 1974-04-01 1974-07-01 1974-10-01 1975-01-01 1975-04-01 1975-07-01 1975-10-01 1976-01-01 1976-04-01 1976-07-01 1976-10-01 1977-01-01 1977-04-01 1977-07-01 1977-10-01 1978-01-01 1978-04-01 1978-07-01 1978-10-01 1979-01-01 1979-04-01 1979-07-01 1979-10-01 1980-01-01 1980-04-01 1980-07-01 1980-10-01 1981-01-01 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 576.50 580.10 586.20 587.60 593.70 604.30 620.00 641.20 668.50 685.20 702.70 725.30 746.50 768.40 792.30 812.70 829.50 838.00 847.00 863.70 878.00 884.50 896.40 913.70 951.40 983.50 1,006.10 1,036.70 1,072.70 1,099.10 1,137.90 1,174.20 1,210.60 1,237.60 1,263.00 1,282.40 1,310.40 1,335.40 1,361.40 1,376.20 1,411.20 1,446.00 1,469.70 1,489.90 1,513.10 1,561.00 1,597.40 1,618.10 1.753 1.778 1.777 1.792 1.809 1.799 1.757 1.774 1.741 1.721 1.694 1.700 1.708 1.683 1.677 1.698 1.715 1.714 1.742 1.729 1.753 1.768 1.785 1.770 1.746 1.743 1.754 1.756 1.735 1.721 1.703 1.693 1.704 1.716 1.718 1.718 1.784 1.798 1.826 1.836 1.839 1.848 1.862 1.874 1.849 1.833 1.879 1.932 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 60.08 60.88 62.20 62.23 63.13 64.60 66.23 67.02 68.24 69.95 71.21 71.95 73.18 74.77 76.89 78.21 79.80 81.67 83.48 84.65 86.87 88.74 91.19 91.57 93.11 94.68 96.71 96.98 99.12 100.74 103.23 104.02 106.05 108.83 112.04 113.36 115.95 118.89 122.31 122.43 124.40 127.73 131.70 132.45 134.39 138.17 142.44 141.38 36.433 36.967 37.500 38.000 38.633 39.067 39.600 39.900 40.333 40.767 40.967 41.267 41.600 42.000 42.400 42.933 43.900 44.867 45.900 47.200 48.533 50.000 51.500 52.433 53.233 54.367 55.233 55.767 56.467 57.367 58.033 59.033 60.333 61.200 61.867 62.933 64.533 66.067 67.400 69.067 71.467 73.833 75.933 78.933 81.833 83.333 85.533 87.800 35.5 35.8 36.1 36.6 36.8 37.0 37.1 37.6 38.1 38.4 38.4 39.1 39.5 40.1 40.5 42.5 44.5 46.4 46.7 49.9 51.6 55.3 57.2 57.2 57.8 59.0 59.7 59.9 60.9 61.6 62.1 63.5 65.0 65.1 65.9 67.5 69.5 70.6 72.2 74.8 77.5 79.9 82.7 86.5 88.3 91.2 93.3 96.1 1981-04-01 1981-07-01 1981-10-01 1982-01-01 1982-04-01 1982-07-01 1982-10-01 1983-01-01 1983-04-01 1983-07-01 1983-10-01 1984-01-01 1984-04-01 1984-07-01 1984-10-01 1985-01-01 1985-04-01 1985-07-01 1985-10-01 1986-01-01 1986-04-01 1986-07-01 1986-10-01 1987-01-01 1987-04-01 1987-07-01 1987-10-01 1988-01-01 1988-04-01 1988-07-01 1988-10-01 1989-01-01 1989-04-01 1989-07-01 1989-10-01 1990-01-01 1990-04-01 1990-07-01 1990-10-01 1991-01-01 1991-04-01 1991-07-01 1991-10-01 1992-01-01 1992-04-01 1992-07-01 1992-10-01 1993-01-01 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 1,662.30 1,695.40 1,742.60 1,773.30 1,811.80 1,846.60 1,893.20 1,986.40 2,039.10 2,074.40 2,117.90 2,153.90 2,200.60 2,233.20 2,288.20 2,347.80 2,389.80 2,443.30 2,484.10 2,513.50 2,580.40 2,646.70 2,710.10 2,745.60 2,770.70 2,788.70 2,823.70 2,867.60 2,923.80 2,952.00 2,982.90 2,994.70 3,015.20 3,072.50 3,138.40 3,179.10 3,206.90 3,238.40 3,268.90 3,304.90 3,343.60 3,351.20 3,370.50 3,392.40 3,398.10 3,396.30 3,430.50 3,410.80 1.903 1.925 1.889 1.842 1.835 1.825 1.806 1.748 1.755 1.780 1.798 1.814 1.822 1.831 1.817 1.802 1.798 1.799 1.796 1.795 1.764 1.745 1.726 1.723 1.740 1.757 1.781 1.774 1.780 1.795 1.817 1.845 1.866 1.858 1.839 1.852 1.863 1.860 1.845 1.832 1.838 1.853 1.866 1.880 1.911 1.937 1.956 1.976 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 144.67 147.13 149.98 150.65 154.18 157.62 162.96 164.70 170.82 175.33 180.58 182.04 186.94 190.00 193.00 193.72 198.82 204.69 210.10 210.47 217.19 223.56 230.63 233.78 239.59 242.89 248.95 250.18 257.00 262.14 266.46 266.07 269.80 272.26 276.52 278.87 286.81 293.89 302.41 308.45 315.27 320.56 328.49 333.13 342.56 351.65 364.60 369.67 89.833 92.367 93.700 94.467 95.900 97.700 97.933 97.867 99.100 100.267 101.167 102.300 103.400 104.533 105.300 105.967 107.267 108.033 109.000 109.233 109.000 109.800 110.400 111.633 113.100 114.400 115.367 116.067 117.533 119.100 120.333 121.667 123.667 124.667 125.867 128.033 129.333 131.567 133.700 134.800 135.600 136.667 137.700 138.667 139.800 140.900 141.900 143.100 98.3 98.9 98.8 99.7 99.8 100.2 100.3 100.4 100.7 101.7 102.2 103.3 104.0 103.8 103.5 103.3 103.4 102.7 103.3 101.7 99.8 99.4 99.7 100.9 102.5 103.7 104.2 104.8 106.5 108.0 108.5 110.9 112.8 112.4 112.8 114.5 114.3 116.5 119.9 117.5 116.3 116.1 116.2 115.9 117.2 117.9 117.8 118.4 1993-04-01 1993-07-01 1993-10-01 1994-01-01 1994-04-01 1994-07-01 1994-10-01 1995-01-01 1995-04-01 1995-07-01 1995-10-01 1996-01-01 1996-04-01 1996-07-01 1996-10-01 1997-01-01 1997-04-01 1997-07-01 1997-10-01 1998-01-01 1998-04-01 1998-07-01 1998-10-01 1999-01-01 1999-04-01 1999-07-01 1999-10-01 2000-01-01 2000-04-01 2000-07-01 2000-10-01 2001-01-01 2001-04-01 2001-07-01 2001-10-01 2002-01-01 2002-04-01 2002-07-01 2002-10-01 2003-01-01 2003-04-01 2003-07-01 2003-10-01 2004-01-01 2004-04-01 2004-07-01 2004-10-01 2005-01-01 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 3,430.90 3,441.50 3,473.40 3,471.10 3,483.50 3,481.30 3,490.30 3,484.10 3,521.60 3,579.70 3,622.80 3,661.00 3,706.80 3,735.70 3,787.30 3,834.60 3,876.70 3,929.70 4,001.30 4,076.20 4,149.00 4,206.70 4,328.90 4,410.80 4,468.80 4,518.70 4,597.50 4,675.50 4,746.10 4,787.00 4,876.60 5,007.30 5,126.40 5,227.80 5,365.20 5,454.80 5,497.90 5,588.80 5,721.60 5,804.30 5,928.60 6,035.70 6,045.30 6,075.60 6,222.10 6,273.00 6,371.10 6,393.30 1.991 2.004 2.029 2.053 2.088 2.110 2.146 2.163 2.160 2.151 2.156 2.155 2.175 2.181 2.190 2.192 2.206 2.208 2.198 2.183 2.169 2.169 2.156 2.146 2.140 2.143 2.161 2.150 2.166 2.157 2.150 2.102 2.076 2.030 1.997 1.987 1.990 1.971 1.943 1.934 1.920 1.923 1.957 1.971 1.961 1.969 1.973 2.002 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 380.74 391.53 404.68 411.29 420.81 428.23 435.90 438.24 447.37 450.37 455.79 456.24 461.77 469.35 478.07 482.14 488.89 496.58 508.02 513.50 519.70 526.59 540.99 550.82 562.84 573.52 609.80 606.25 602.73 605.90 613.64 618.63 628.33 651.80 665.72 679.27 691.67 702.76 714.71 725.89 737.13 744.54 756.26 760.35 769.82 783.21 793.75 797.19 144.200 144.767 145.767 146.700 147.633 148.933 149.633 150.867 152.200 152.867 153.600 155.000 156.533 157.367 158.500 159.567 160.200 160.833 161.467 161.900 162.767 163.400 163.967 164.600 166.200 167.233 168.267 169.933 171.733 173.100 174.033 175.700 177.533 177.767 177.267 177.900 179.833 180.600 181.167 183.000 183.667 184.567 184.600 186.267 188.933 189.600 190.733 191.933 119.5 118.9 118.9 119.4 120.0 121.0 121.4 123.4 124.9 125.2 125.5 126.3 127.8 128.2 128.4 128.5 127.2 127.2 127.5 125.0 124.9 124.3 123.5 122.6 124.5 126.9 127.9 129.6 132.0 133.8 135.5 137.8 136.2 133.4 129.4 128.9 130.8 131.7 133.1 138.0 137.2 138.1 139.2 142.2 146.3 147.7 150.5 152.1 2005-04-01 2005-07-01 2005-10-01 2006-01-01 2006-04-01 2006-07-01 2006-10-01 2007-01-01 2007-04-01 2007-07-01 2007-10-01 2008-01-01 2008-04-01 2008-07-01 2008-10-01 2009-01-01 2009-04-01 2009-07-01 2009-10-01 2010-01-01 2010-04-01 2010-07-01 2010-10-01 2011-01-01 2011-04-01 2011-07-01 2011-10-01 2012-01-01 2012-04-01 2012-07-01 2012-10-01 2013-01-01 2013-04-01 2013-07-01 2013-10-01 2014-01-01 2014-04-01 2014-07-01 2014-10-01 2015-01-01 2015-04-01 2015-07-01 2015-10-01 2016-01-01 2016-04-01 2016-07-01 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 6,461.20 6,525.30 6,627.20 6,710.20 6,804.20 6,861.80 6,995.40 7,104.20 7,240.60 7,300.90 7,406.60 7,568.70 7,703.20 7,734.70 8,023.60 8,307.80 8,403.30 8,362.90 8,457.80 8,483.80 8,564.10 8,577.90 8,748.00 8,880.20 9,033.60 9,378.30 9,606.70 9,787.20 9,900.70 10,049.50 10,342.80 10,507.50 10,595.20 10,710.90 10,972.00 11,144.50 11,281.10 11,395.90 11,605.80 11,822.60 11,927.30 12,044.60 12,271.70 12,539.00 12,724.50 12,918.90 2.013 2.020 2.019 2.033 2.034 2.022 2.010 2.005 1.998 1.988 1.981 1.942 1.929 1.910 1.812 1.736 1.711 1.711 1.722 1.735 1.743 1.746 1.742 1.721 1.714 1.653 1.645 1.638 1.629 1.606 1.578 1.574 1.561 1.556 1.552 1.533 1.532 1.535 1.527 1.509 1.508 1.500 1.487 1.463 1.450 1.439 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 801.10 809.23 819.03 829.29 834.86 834.82 841.20 845.04 848.34 852.43 856.30 855.09 858.49 893.68 1,436.77 1,660.67 1,760.41 1,747.61 2,018.71 2,085.93 2,030.60 2,004.23 2,005.86 2,239.19 2,593.19 2,680.89 2,642.96 2,684.37 2,646.46 2,652.52 2,665.33 2,861.21 3,130.07 3,413.73 3,684.04 3,836.96 3,948.93 4,060.41 3,940.95 3,983.59 3,992.44 4,015.21 3,991.63 3,865.95 3,865.01 3,794.54 194.500 196.867 197.867 198.933 202.300 203.433 201.700 203.756 207.662 208.235 209.716 212.100 216.757 219.278 213.075 212.015 214.263 215.718 216.152 217.020 218.051 218.254 218.898 221.666 225.531 226.452 226.108 227.907 229.793 230.297 230.380 231.740 232.993 233.874 233.221 234.997 237.772 238.044 236.132 234.849 237.681 238.305 237.233 237.386 240.169 240.968 154.5 158.7 164.3 162.8 165.4 166.7 164.1 166.7 172.8 173.7 177.4 183.9 196.0 200.5 178.0 169.5 171.3 173.9 176.9 182.1 184.2 184.6 188.0 195.9 203.7 203.8 200.8 202.2 201.8 202.4 202.3 203.6 204.0 204.2 201.9 205.5 208.2 207.1 200.4 191.5 193.0 191.6 185.6 182.0 185.4 187.1 modities, Finished Consumer Foods, Processed Food and Feeds and Consumer d at Home ough 2016 (III) PPI Finished Consumer Foods (82=100) 35.2 34.9 34.6 34.3 34.8 35.4 35.5 36.2 35.9 35.0 35.2 35.2 35.9 35.3 35.8 35.8 35.3 35.2 35.3 35.3 35.3 35.3 35.6 35.5 35.6 36.8 37.1 38.0 39.1 38.8 39.5 39.3 38.3 38.3 38.7 38.9 39.1 39.8 40.3 40.8 41.0 PPI Processed Food and Feeds (82=100) 36.0 35.8 35.4 35.0 35.3 35.5 35.6 35.9 36.5 36.0 36.0 36.1 36.6 36.1 36.8 36.7 36.5 36.6 36.9 37.0 36.9 36.3 36.7 36.7 37.0 37.6 38.5 38.9 39.9 39.8 40.9 40.3 39.8 39.6 40.1 39.7 40.2 40.5 41.1 40.8 41.4 CPI Food at Home (82=100) 31.433 31.100 31.133 31.133 30.967 31.467 31.467 31.967 32.000 31.767 31.700 31.600 31.867 31.967 31.933 32.133 32.367 32.233 32.467 32.433 32.633 32.633 32.767 33.033 32.833 33.500 33.800 33.967 34.900 35.233 35.333 35.467 35.000 34.800 35.267 35.467 35.767 36.067 36.333 36.900 37.033 42.2 42.7 43.8 44.2 43.7 43.7 43.5 43.6 44.7 44.4 45.3 45.7 46.3 47.4 48.4 51.9 55.2 59.0 59.8 63.2 62.2 64.3 67.8 67.3 68.6 71.2 72.2 70.0 70.4 69.0 69.1 71.4 73.2 73.8 74.5 76.8 79.7 80.5 82.7 86.2 86.8 86.9 89.1 89.6 89.2 94.4 96.4 96.8 42.5 43.3 43.4 44.6 44.4 45.0 44.3 44.9 45.5 46.0 45.7 47.0 47.2 48.3 49.6 54.4 57.9 62.2 61.1 64.9 63.0 69.4 74.4 72.4 71.4 73.8 72.9 70.5 71.5 71.1 70.1 72.2 75.6 73.7 74.3 77.3 80.5 81.0 83.4 86.8 88.1 88.8 90.3 91.9 92.2 98.2 101.4 99.7 37.600 38.400 39.133 39.767 39.900 39.967 40.133 40.067 40.900 41.100 41.467 42.100 42.300 42.800 43.667 45.800 48.467 51.333 53.033 55.467 56.267 56.900 59.500 60.367 60.500 62.500 63.700 63.033 62.567 63.133 63.567 64.933 66.733 67.400 68.200 70.067 73.667 75.200 76.467 79.700 81.633 82.233 83.600 84.967 86.367 89.567 92.600 93.700 97.5 98.9 98.2 99.0 100.9 100.1 100.0 100.1 101.0 100.8 102.1 105.4 104.8 105.7 105.5 105.6 104.1 103.5 105.1 105.1 105.8 108.7 109.5 108.3 110.2 110.0 109.6 110.3 110.9 114.0 115.2 117.6 118.0 118.6 120.7 124.5 123.6 124.5 124.9 124.9 125.1 123.4 123.1 123.1 122.7 123.2 124.1 124.7 98.8 99.7 97.4 98.5 100.9 100.9 99.6 100.9 101.6 102.0 102.7 105.3 106.0 105.5 104.8 104.8 103.4 102.4 103.6 104.1 104.1 106.8 106.6 106.1 108.4 108.7 108.3 109.3 111.6 115.0 114.9 116.9 117.5 118.0 118.7 120.4 122.5 122.9 121.9 122.3 122.2 121.4 121.6 121.6 122.5 122.2 121.9 122.8 94.100 95.567 96.067 96.933 98.167 98.833 98.433 98.200 99.267 99.367 99.767 102.300 102.333 103.000 103.467 104.233 104.000 103.933 104.867 105.733 106.033 108.033 109.300 110.500 111.700 112.333 112.967 113.767 115.000 118.100 119.367 121.300 123.900 125.167 126.567 130.733 131.000 133.200 134.400 135.067 136.867 135.667 135.600 135.933 136.200 137.233 137.833 138.400 126.2 125.2 126.6 127.2 126.6 126.1 127.2 128.4 128.1 128.9 130.7 131.4 132.3 134.5 136.1 134.9 134.6 133.8 134.7 134.0 134.0 134.4 134.8 135.4 134.5 135.1 135.5 136.1 137.6 136.9 138.1 140.2 141.9 141.9 141.2 142.4 139.4 139.1 139.3 142.5 144.6 146.2 150.5 149.3 154.4 152.1 155.0 155.6 124.0 124.3 124.9 126.3 126.0 125.0 124.5 125.8 125.3 127.3 129.7 130.2 132.5 135.6 135.0 133.6 134.7 134.1 133.4 131.3 131.3 132.2 131.6 131.2 130.1 131.6 131.7 131.6 133.9 133.4 133.4 135.6 137.6 139.1 137.0 136.2 135.6 136.2 136.8 139.7 141.8 143.8 148.1 147.7 155.1 151.7 150.5 152.5 139.733 140.167 141.900 142.367 142.833 145.100 146.033 147.267 148.700 149.033 150.000 151.467 153.100 155.100 157.400 157.400 157.500 158.433 159.200 160.167 160.500 161.167 162.667 163.533 163.833 164.233 165.333 165.933 167.167 168.867 169.467 171.367 172.933 174.267 174.967 175.767 175.800 175.267 175.533 176.900 178.233 179.833 182.667 183.700 185.967 186.867 188.233 187.967 156.1 154.5 156.8 155.4 155.1 157.7 159.0 163.9 166.4 167.0 171.2 175.2 178.1 181.5 180.3 175.4 175.4 173.8 177.4 182.3 182.5 180.7 184.1 191.5 192.4 195.1 196.7 197.6 197.7 199.1 201.7 203.7 202.8 203.3 204.0 207.4 213.1 214.1 215.3 211.8 210.3 209.6 207.1 207.7 205.1 203.6 153.6 152.9 153.5 152.9 152.8 154.2 155.3 160.4 164.8 166.8 168.3 174.7 180.3 186.7 180.1 175.6 176.9 176.0 176.4 179.2 181.4 182.3 186.1 191.2 197.4 201.1 200.3 201.1 202.9 207.4 209.4 207.7 208.4 209.6 207.6 210.8 218.2 220.0 217.0 210.8 210.2 210.3 205.0 202.5 204.7 204.6 189.933 190.000 191.233 192.333 192.000 193.500 194.600 197.490 200.213 202.411 204.901 207.682 212.009 217.411 219.452 217.944 215.275 213.705 213.565 215.005 215.638 215.659 217.019 221.059 225.083 228.532 230.121 230.949 231.610 231.718 232.780 233.582 233.701 234.018 234.120 235.725 239.111 240.824 242.103 242.171 241.538 242.784 242.465 241.045 239.738 238.216 Homework Round 2 Part 1 Download the raw data in the Excel file entitled Class Homework 2 data.xlsx. Reindex all consumer and producer price indices to set 1959 Q1 as the base period for the index. Calculate the nominal value of GDP using the money supply (M2) and velocity (M2V). Calculate the real (inflation adjusted) value of the GDP using the consumer price index for the 1959 Q1 base period. Calculate indices for the money supply (M2), Nominal GDP and Real GDP using 1959 Q1 as a base period Create line charts showing each of the following: o Nominal and Real GDP (Exhibit 1) o The indices of the money supply, nominal and real GDP using 1959 Q1 as the base year (Exhibit 2) o Format the charts completely in black and white. Use different dash types (i.e., solid versus dotted) to differentiate the lines on the chart. Include a legend at the bottom of the chart that identifies each line type. o Complete the descriptive titles as per the guidelines for formatting an exhibit. Be able to explain the identity of each element in each of the two charts. Be able to provide a description of the behavior of each element in each of the two chart. Write out a one-to-two sentence answer to each of the following questions. o At what points does the relationship between real and nominal GDP appear to change? o What economic conditions were present at the time of these changes? o To what degree has expansion of the money supply created both nominal and real economic growth over the time period covered by the chart? Has this changed over time? o What do these findings imply about the current state of the economy? o What do these findings imply about the effectiveness of monetary policy in creating economic growth? Open a Word document. Copy and paste your charts into the Word document. Add your written answers to the document below the chart. Part 2 Working with the same data set (Class Homework 2 data.xlsx); credit the following charts: o Exhibit 3: Indices of the Monetary Base and Producer Prices for All Commodities (1959 I =100) o Exhibit 4: Indices of Consumer Prices for General Goods and Services and Food at Home; Indices of Producer Prices for Finished Consumer Foods and Processed Food and Feeds (1959 I =100) o Format charts as you have learned up to this point in the course Create a new variable by taking the difference between the CPI for food at home and the PPI for Finished Consumer Foods. Use the information to create the following chart: o Exhibit 5: Spread Between CPI for Food at Home and PPI for Finished Consumer Foods Be able to explain the identity of each element in each of the three charts. Be able to provide a description of the behavior of each element in each of the three charts. Write out a one-to-two sentence answer to each of the following questions. o At what point or points do the relationship between the monetary base and general commodity prices appear to change? o At what point or points do the relationship between the different price indices appear to change, if at all? How do you explain the changes and differences you observe? o What economic conditions were present at the time of these changes? o To what degree has expansion of the money supply created commodity price inflation and inflation in food prices? Has this changed over time? o At what point or points did the relationship between food prices at the consumer level and at the producer level change? What does this say about the structure of the food industry, competitiveness and pricing strategies? o What do these findings imply about the current state of the economy? o What do these findings imply about the monetary policy and inflation? o What do these results mean for different firms in the food industry