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Question: using the information above answer the following questions say that...

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Using the information above, answer the following questions. Say that nominal GDP in 2016 is $10 trillion. The GDP deflator (in 2005 dollars) is 111. a) Have prices increased or decreased between 2005 and 2016? Laiente b) What is real GDP in 20162 3. Growth rates Finally, we want to be familiar with growth rates, or the percentage change in a variable: where t indicates today and t-1 indicates a year earlier Say my income this year is $15,000 and that last year it was $14,000 growth rate of x- 100 Xt-1 1. What was the growth rate of my income? Why are we interested in the growth rate (percentage change) rather than the absolute change ($1000 increase)? 2. 4. Getting familiar with the FRED database Reproduce the graph we did as a class (Total Credit to Non-Financial Sector, Adjusted for Breaks, for United States relative to Gross Domestic Product). Download the graph as a PDF 1. 2. Interest rates: Open the FRED database in a new window, and graph the following two series on one graph: 30- Year Fixed Rate Mortgage Average in the United States and the Effective Federal Funds Rate Download the graph as a PDF a) Recall from your macro classes that the Federal Funds Rate (FFR) is the main interest rate that the Federal Reserve selects when making monetary policy decisions. What was the FFR in December 2018? b) Discuss what you learn from your graph with your group, and summarize your answer in the space below. Be sure to discuss both the evolution over time (e.g. how does the 3-year mortgage rate today compare to 30 years ago?) and to compare the levels of the two series (e.g. is the FFR higher/lower than the mortgage rate?). c)

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