Do the two variables evolve in opposite directions

Reference no: EM131136543

By the end of this chapter you learned that increases in interest rates reduce aggregate demand. Is this true in practice? Let us take a look at how interest rates are related to the growth rate of the U.S. economy. Go to https://research.stlouisfed.org/fred2 . Download data for the following two variables: ( a ) Real Gross Domestic Product, Annual percentage changes (under "Gross Domestic Product (GDP) and Components," "GDP/GNP," click on the series "GDPCA," click on "Download series," and select "Percent change from Year Ago."); and ( b ) Bank Prime Loan Rate (under "Interest Rates," "Prime Bank Loan Rate," click on and download the series "MPRIME," then transform the monthly observations into annual data using the average function in EXCEL.) Use EXCEL to plot these two series on the same graph. What can you say by examining the graph? On average, do the two variables evolve in opposite directions?

Reference no: EM131136543

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