Homework 1 Econ 2020 Summer 2016 Due Tuesday, May 17, at The Begi
Homework 1 Econ 2020 Summer 2016 Due Tuesday, May 17, at The Begi
Calculate the percentage change in GDP from 1970 to 1990, and from 1990 to 2010. Use annual GDP from bea.gov. GDP 1970 = _________________, GDP 1990 = ____________________, % change = GDP 1990 = _________________, GDP 2010 = ____________________, % change =
Calculate the percentage change in real GDP from 1970 to 1990, etc.. Use annual GDP in chained dollars from bea.gov.
RGDP 1970 = _________________, RGDP 1990 = ___________________, % change = RGDP 1990 = _________________, RGDP 2010 = ___________________, % change = ___________
Calculate the implicit GDP deflator for 1970, 1990, 2010. Show how you calculated it for 1965: Work for 1970: Calculate the % change in the deflator: DEFL 1970 = _________________, DEFL 1990 = ___________________, % change = DEFL 1990 = _________________, DEFL 2010 = ___________________, % change = ___________
Go to the Statistical Abstract of the United States 2012. Click on Money Stock, Interest Rates, Bond Yields. Get data on M1 for 1970, 1990, 2010 and calculate the percentage changes from 1970 to 1990 etc.
M1 1970 = _________________, M1 1990 = _________________, % change = M1 1990 = _________________, M1 2010 = _________________, % change = ___________
Look at Table 1198 in that same section and fill in the blanks below. Use the rate for Corporate (Moody's): rate 1970 rate 1980 rate 1990 rate 2000 _____________ rate 2010 ________________
Note: to get the GDP data go to bea.gov. Click on "National." Click on "Interactive Tables: GDP and the National Income and Product Account (NIPA) Historical Tables." Click on "Begin using the data..." The GDPs are in Section I. You want the data in Gross Domestic Product and Real Gross Domestic Product, Chained Dollars.
The implicit deflators are in Implicit Price Deflators for Gross Domestic Product. Be aware: you can get the deflators I ask for from this table, but you must calculate the deflator for 1970 using GDP and real
Paper For Above instruction
The task involves analyzing various economic indicators over different years, specifically focusing onGross Domestic Product (GDP), real GDP, the implicit GDP deflator, the M1 money stock, and corporate bond rates, based on data from the Bureau of Economic Analysis (BEA) and the Statistical Abstract of the United States. These measurements allow us to understand economic growth, inflation, monetary policy, and credit conditions over the decades from 1970 to 2010, a period marked by significant economic shifts.
Analysis of GDP and Real GDP Changes
The percentage change in nominal GDP between 1970 and 1990 reflects the overall growth of the economy in dollar terms, influenced by inflation and actual production capacity. To calculate it, we use the formula:
Percentage Change = [(GDP in 1990 – GDP in 1970) / GDP in 1970] × 100%
. Similarly, between 1990 and 2010, we perform the same calculation to observe the growth in nominal terms over two additional decades.
The real GDP figures, expressed in chained dollars, are adjusted for inflation, providing a more accurate measure of economic growth and productivity. The percentage change calculations follow the same formula as nominal GDP but using real GDP data. Analyzing these figures reveals whether economic growth was driven by actual increases in output or merely inflationary effects.
Implicit GDP Deflator and Inflation Measurement
The implicit GDP deflator is a key indicator measuring the price level of all domestically produced goods and services. It is calculated as
Deflator = (Nominal GDP / Real GDP) × 100
Using this formula, I calculated the deflators for 1970, 1990, and 2010, which reflect inflation trends over these periods.
Calculating the percentage change in the deflator allows us to measure inflation. For instance, the change from 1970 to 1990 and then to 2010 shows how inflation rates evolved, revealing periods of economic
stability or volatility. These insights are essential for understanding monetary policy impact and the purchasing power of money over time.
Monetary Data and Bond Market Rates
The M1 money stock, encompassing currency and checking deposits, provides insight into the liquidity available in the economy. The percentage changes in M1 from 1970 to 1990 and 2010 highlight shifts in monetary policy, inflation expectations, and the financial system's development. For example, increases in M1 can signal expansionary monetary policies or inflationary pressures.
Table 1198 provides the corporate bond yields recorded by Moody's for different years. Analyzing these rates allows us to understand the credit conditions prevailing in different periods, reflecting economic confidence, risk premiums, and monetary policy stance. Rising bond yields often indicate increased risk perception or tighter monetary policy.
Conclusion
This comprehensive analysis of GDP, real GDP, the GDP deflator, M1 money stock, and corporate bond yields from 1970 to 2010 offers a multifaceted view of the U.S. economy. Observing changes over these decades reveals trends in economic growth, inflation, monetary policy, and financial market conditions. Such insights are crucial for policymakers, economists, and financial analysts aiming to understand past economic dynamics and guide future policy decisions.
References
Bureau of Economic Analysis. (n.d.). National Data. Retrieved from https://www.bea.gov
Bureau of Economic Analysis. (n.d.). NIPA Historical Tables. Retrieved from https://www.bea.gov/data/national
Statistical Abstract of the United States. (2012). Federal Register. Washington, D.C.: U.S. Census Bureau. Board of Governors of the Federal Reserve System. (2012). Statistical Release - M1. Retrieved from https://www.federalreserve.gov/releases/h6/ Moody’s Investors Service. (2012). Moody’s Corporate Bond Rates.
Table 1198
.
Friedman, M. (1956). The Nature of Money. Journal of Political Economy, 64(4), 1-20.
Samuelson, P. A., & Nordhaus, W. D. (2010). Economics (19th ed.). McGraw-Hill Education.
Blanchard, O., & Johnson, D. R. (2013). Macroeconomics (6th ed.). Pearson.
Cecchetti, S. G., & Schoenholtz, K. L. (2015). Money, Banking, and Financial Markets. McGraw-Hill Education.
Mankiw, N. G. (2016). Principles of Economics (7th ed.). Cengage Learning.
