All about Money

: All about Money

This homework is due in class on September 18th. Please note all work need to

be typed, except for graphs. Please no late homework. Thank you.

From the 2013 Economic Report of the President, please find data on the

following annual series from year 1973 to 2012:

• Nominal GDP
• Real GDP
• M1
• M2
• Each component of M1
• Each component of M2 that is not in M1

1. Please put/show the above data you got from the Report in one table;
2. Please graph Nominal GDP, Real GDP, M1, and M2 into one graph. Based

on the graph please describe any relationship you observe among the following

variables:

• Among the Monetary aggregates
• Between the monetary aggregates and nominal GDP
• Between the monetary aggregates and real GDP

3. From the existing series please generate another two new series V1 (the

velocity of M1) and V2 (the velocity of M2). Please display V1 and V2 together

with the other series;

4. Please put V1 and V2 into one graph. From the graph, what is your answer to

the question: Is velocity constant? If not, which one is more stable?

5. Please graph the components of M1 into one graph and comment on what

happened to each component over time.

6. Please graph the components of M2 into one graph and comment on what

happened to each component over time.

Note: the Economic Report of the President is a very good source for

economic data. You can find this report on the Government Printing Office’s

website, http://www.gpoaccess.gov/eop/index.html, the link is provided on the

class website’s external links section at Blackboard. You are very much

encouraged to read the whole report if you are interested to know more about

the U.S. economy. However, for this assignment, you just need to obtain the

data from the report. The data you are looking for is in appendix B in the report

and they can be downloaded in spreadsheet from the above website.