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Using OECD Database, obtain annual data (from 1990 to 2019) on the inflation rate (CPI), the short-term interest rate, and the unemployment rate (15-64 age) for Spain. (Excel File must be submitted).
a. According to the AE curve and Okun's law, what is the relationship between the real interest rate and unemployment?
b. Using data from 1990 to 2019, plot the unemployment rate against the real interest rate, defined as the nominal rate minus inflation (Create a graph with the unemployment rate on one axis, the real interest rate on the other, and a point for each year). What relationship, if any, do you see?
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