# ECON 301 American University Intermediate Macroeconomics Worksheet

Description

Homework #1
Question 1 Page 58 Numerical problem #5
Question 2 Page 58 Numerical problem #6
Question 3 Page 58 Numerical problem #8
Question 4 Real GDP
Download the quarterly data for the percent change from preceding period in real Gross
Domestic Product from 1947Q2 to 2022Q1, available at the BEA website: www.bea.gov.
On the top row, click the icon “Tools” and select “Interactive Data.” Then click “GDP
and Personal Income,” and select “Begin using the data.” Click “Section 1,” you will see
Table 1.1.1. To the right end of the Table, click the icon “MODIFY,” choose the “First
Year” as 1947 and the “Last Year” as 2022, and the data frequency as “Quarters.” Then
click “Refresh Table,” and the icon “DOWNLOAD” the data in Excel format. Note that
there are two sheets in the saved Excel file, Sheet0 and Sheet1. You need the datasets
from both sheets and plot the quarterly real GDP growth from 1947Q2 to 2022Q1 in
Excel. (1) Is there any change in the volatility of U.S. output fluctuations before and after
1983? (2) What is the impact of COVID-19 on real GDP growth? Your answer should
include the dataset in Excel (a separate file), the graph as well as explanations.
Question 5 Inflation Rate
Let’s work with a macro database, FRED, available at https://fred.stlouisfed.org/.
(1) Download Personal Consumption Expenditure (PCE) price. Go to the FRED website.
In the search box, type “pce price,” you’ll see “Personal Consumption Expenditures:
Chain-type Price Index” (the first item on my screen). Click the link, and on the top right
corner, click “DOWNLOAD” in Excel file. Now, calculate the PCE inflation rate as the
percentage change over the same month of the previous year. For example, in January
1960, the inflation rate is calculated as
(PCE in Jan. 1960 – PCE in Jan. 1959)/ PCE in Jan. 1959
(2) Download Consumer Price Index (CPI) from the FRED by searching “cpi,” scroll
down, and find (the second item on my screen)
“Consumer Price Index for All Urban Consumers: All Items in U.S. City Average”
calculate the CPI inflation rate as the percentage change over the same month of the
previous year.
(3) Plot them together in one graph using Microsoft Excel during January 1960 – May
2022. Label each series clearly. Explain, if any, the difference between CPI-based
inflation and PCE-based inflation. Your answer should include the dataset in Excel (a
separate file), the graph as well as explanations.
(4) Briefly explain the dynamics of inflation rate during the pandemic, i.e. since March
2020. What are the main drivers of the recent movement of inflation rate?