Measurement ProjectInstructions:This assignment is an extra credit mini project. It asks   you to download data and reproduce the graphs shown in class.It is designed to give you an idea of what

Measurement 

Project

Instructions:

This assignment is an extra credit mini project. It ask

s   you to download data and reproduce 

the graphs shown in class.

It is designed to give you an idea of 

what the measurements we talked about 

in class look like in reality. You can use whatever software you are 

comfortable 

with to finish the assignment. (e.g. Excel, STATA, R, Matlab, and etc)

Submission:

You can discuss with yo

ur classmates, but you must finish the project individually and 

submit the following to me 

): (1) a PDF/word file of plots and answers; (2) a zip file 

including all of your raw data, excel file, and codes (if 

you have any).  

Download the following data from FRED from 1941 

– 2017.

1.

Nominal GDP, seasonally adjusted, at quarterly frequency;

2.

Real GDP, seasonally adjusted, at quarterly frequency;

3.

Real domestic investment, seasonally adjusted, at quarterly frequency;

4.

Real consumption expenditure, seasonally adjusted, at quarterly frequency;

5.

Real government expenditure, seasonally adjusted, at quarterly frequency;

6.

Real net export, seasonally adjusted, at quarterly frequency;

7.

CPI for all urban consumers, seasonally adjus

ted, at quarterly frequency;

Use the downloaded data to plot the following graphs and answer the following questions.

1.

Plot the graph of real logGDP and nominal logGDP. What’s difference between these two 

measurements of GDP? Which one do you think is a bet

ter measurement of production capacity 

of a country? Why?

2.

Reproduce the graph on Slide 16 of

Measurement

. (Remember to take natural log for each 

variable.)

3.

Reproduce the graph on Slide 17 of

Measurement

. (Remember to take natural log for each 

variable.)

4.

Plot the graph of implicit GDP deflator constructed from

nominal GDP and real GDP

.  

5.

Use the implicit GDP deflator in 4 and the CPI downloaded from FRED to construct inflation rate 

respectively. Plot these two inflations in one graph. Roughly, which one is hi

gher? Which one 

fluctuates more?