05 Jun Question NOVA SOUTHEASTERN UNIVERSITY
Question
NOVA SOUTHEASTERN UNIVERSITY
ECN 5050 – Economic Thinking Data Exercise 4This exercise is designed to assess your ability to manipulate, analyze, and present data in accordance with Course Competencies #5: Locate and download appropriate macroeconomic data, #6: Use Microsoft Excel to manipulate and analyze data, and #7 Graph macroeconomic data effectively.
Instructions:1. Put all of your work in one file;2. Write your name in the header;3. We need to see your work in Excel (i.e., formulas). Do not copy and paste numbers from your original worksheet to a new worksheet. When submitting, make sure that the cells in your worksheet show formulas.4. After you finish the assignment, name your file LastnameDE1.xls (or .xlsx, depending on the version of Excel). Note that you do not have to write the .xls suffix by yourself Excel will do it automatically, and5. Upload it to the Data Exercise Section of the Blackboard.
Background:One of the most regular relationships in macroeconomic data is the relationship between the unemployment rate and the growth rate of real GDP. Specifically, the relationship is between the percentage-point change in the unemployment rate from one year to the next and the growth rate of real GDP:
Percentage Change in Real GDP = ??- ??(Percentage-point Change in Unemployment Rate)
Assignment:You are hired as a business consultant to a Senator. She heard the association between the unemployment rate and economic growth, and asks you to estimate the relationship so that she could propose a policy to lower the unemployment rate.
a. Find the appropriate tables from the most recent Economic Report of the President https://www.whitehouse.gov/administration/eop/cea/economic-report-of-the-President and graph the relationship of the two variables. Click on the most recent year. Go down to Appendix B. Click on Download individual tables as Excel. Sends you to new web site. Click again on the most recent year. Go to appendix B. You will download as excel files TABLE B-3 and B-12. TABLE B-3 contains the quantity index for gross domestic product (=real gross domestic product) and TABLE B-12 contains the Civilian Unemployment Rate. Load these two columns of data into an excel file which you will submit for the data exercise. You will need a column with the years (but not the quarters or months) One series begins in 1965 and the other series begins in 1970. Match them up. • In your graph, put the percentage-point change in unemployment rate on the horizontal axis and the GDP growth rate on the vertical axis.• Use “Scatter Plot” to plot the two series on a graph, taking the change in the unemployment rate on the horizontal (X) axis and the growth rate in real GDP on the vertical (Y) axis.• Insert the linear trend line. To insert the trend line, put your cursor on one marker on your scatter plot, right-click the mouse ,and choose “Add Trend Line” from the menu.• Note that Excel gives you the relationship in y = – ?x + ?b. Given the relationship you estimated and the most recent GDP growth rate (The most recent year in your downloaded data, perhaps 2014), use the equation to estimate how many years it would take to reduce the unemployment rate by 2 percentage points, assuming that the current GDP growth rate will continue into the future? (Hint: plug the -2 percentage points into the equation and solve for the GDP growth rate. Divide the required growth by the most recent annual growth rate.)
For your reference, an example of the graph is provided below (parameter values in the equation are hidden). If done correctly, your graph should look like the one below. You will have more points.
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