What was the average annual inflation rate

Assignment Help Microeconomics

Reference no: EM131023254

[Applying the equation of exchange] Go to the Web site of the Federal Reserve Bank of St. Louis (research. stlouisfed .org/fred2/) and find the most recent values and values from the same quarter 10 years earlier for the following three variables: (1) Real Gross Domestic Product (GDPC1), (2) the GDP Price Deflator (GDPDEF), and (3) the M2 Money Stock (M2SL).

a. Using these data, calculate the average annual rate of change in both real GDP and M2 over this 10-year period.

b. If we assume that velocity was constant during this period, what was the average annual inflation rate?

c. Using the GDP Price Deflator data, calculate the average annual inflation rate over this 10-year period.

d. Use your answers to parts (b) and (c) to discuss what must have happened to velocity during this period.

Reference no: EM131023254

Questions Cloud

What is probability that this person really has disease : Suppose 10% of the population has the disease. What is the probability that a randomly chosen person will test positive?

Forecasts of increasing sales of new homes : In 2012, Jeff Fettig, CEO of Whirlpool, based an optimistic forecast of his company's sales on forecasts of increasing sales of new homes in the United States. Explain why changes in the demand for housing affect Whirlpool's sales.

What is the equilibrium quantity of savings : Now suppose that the government acts more realistically and decides to run a massive deficit of $1500 dollars no matter what the interest rate is in the economy. What is the equilibrium quantity of savings in this economy

What is the probability that she will get it right : Suppose that a student who is about to take a multiple choice test has only learned 40% of the material covered by the exam.Thus, there is a 40% chance that shewill know the answer to a question. However, even if she does not know the answer to a ..

What was the average annual inflation rate : Using these data, calculate the average annual rate of change in both real GDP and M2 over this 10-year period. If we assume that velocity was constant during this period, what was the average annual inflation rate?

Leveraged recapitalization-issuing debt-repurchasing stock : Hubbard Industires is an all-equity firm whose shares have an expected return of 9.9%. Hubbard does a leveraged recapitalization, issuing debt and repurchasing stock, until its debt-equity ratio is 0.54. Due to the increased risk, shareholders now ex..

Insurance claims are processed in abundance : Imagine the health organizations, such as doctors, hospitals, etc. Insurance claims are processed in abundance. It takes approximately 30-60 days for payment to be received. Afterwards, there might be an error in processing or coverage, which would h..

Sources of evidence and search strategies : You should have a full understanding of what evidence-based management is and its importance to an organization. In addition, you have learned about the importance of having credible sources that support decision making. This discussion focuses on th..

Which bond fund has higher risk : Which bond fund has higher risk (all else being equal): a fund with an average maturity of 10 years, or a fund with an average duration of 9 years?

User Account

All Pages