So let's update the final FRED graph shown in the Week 5 Power Point presentation.Can you do it without line-by-line instructions?

Use website to construct graph: https://fred.stlouisfed.org

First, upload the annual real (2012 chained dollars) GDP series (FRED code =GDPCA)from 1960 through 2020GDP. Then, while in Edit Line 1, upload the annual real potential GDP (FRED code = GDPPOT) series.(Remember, you're not graphing this series, merely adding it to be able to modify series 1.You'll note that GDPPOT data are quarterly. When you add this series, however, FRED converts the frequency into annual data, since your GDP data are annual.)Now, combine the two series to produce a series that shows the ratio of GDP to potential GDP.That is, in the Formula box, simply type in "a/b", then click "apply."The ratio values should now appear on the left axis.

Then adding another line ("Edit Graph/Add Line"), graph thepercent change from year agoof the GDP implicit price deflator (FRED code = A191RD3A086NBEA), and, using "Format"while in "Edit Line 2," place the GDP implicit price deflator series label on theright axis. (You must change units from "Index" to "Percent change from a year ago.") Note:you'll probably have to select the correct range of 1960 - 2020 again after you add the implicit price deflator series.

(a)Attach Graph

(b)What is the ratio of GDP / Potential GDP for 2020? (Express as a number, not a percentage, with three decimal places, e.g., 0.981)

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(c)Looking at this graph, why do you think economists call the mid 80s, 90s, and into 2000s the Great Moderation?

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(d)Referring to the graph, explain why we can catalog the 1974-75 recession as a classic supply-shock induced recession.

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(e)Suppose you were asked to do this same assignment next year at this time.What do you think the trajectory of the lines would be?Why?

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