Table provided gives data on gross domestic product (GDP) for the United States for the years 1959–2005. a. Plot the GDP data in current and constant (i.e., 2000) dollars against time. b. Letting Y denote GDP and X time (measured chronologically starting with 1 for 1959, 2 for 1960, through 47 for 2005), see if the following model fits the GDP data: Yt = β1 + β2 Xt + ut Estimate this model for both current and constant-dollar GDP. c. How would you interpret β2? d. If there is a difference between β2 estimated for current-dollar GDP and that estimated for constant-dollar GDP, what explains the difference? e. From your results what can you say about the nature of inflation in the United States over the sample period? Please answer c, d, and e. Thank you!
Table provided gives data on gross domestic product (GDP) for the United States for the years 1959–2005. a. Plot the GDP data in current and constant (i.e., 2000) dollars against time. b. Letting Y denote GDP and X time (measured chronologically starting with 1 for 1959, 2 for 1960, through 47 for 2005), see if the following model fits the GDP data: Yt = β1 + β2 Xt + ut Estimate this model for both current and constant-dollar GDP. c. How would you interpret β2? d. If there is a difference between β2 estimated for current-dollar GDP and that estimated for constant-dollar GDP, what explains the difference? e. From your results what can you say about the nature of inflation in the United States over the sample period? Please answer c, d, and e. Thank you!
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Q. Table provided gives data on
a. Plot the GDP data in current and constant (i.e., 2000) dollars against time.
b. Letting Y denote GDP and X time (measured chronologically starting with 1 for 1959, 2 for 1960, through 47 for 2005), see if the following model fits the GDP data:
Yt = β1 + β2 Xt + ut
Estimate this model for both current and constant-dollar GDP.
c. How would you interpret β2?
d. If there is a difference between β2 estimated for current-dollar GDP and that estimated for constant-dollar GDP, what explains the difference?
e. From your results what can you say about the nature of inflation in the United States over the sample period?
Please answer c, d, and e. Thank you!
![TABLE 3.8
Year
NGDP
RGDP
Year
NGDP
RGDP
Nominal and Real
1959
506.6
Gross Domestic
2,441.3
1983
3,536.7
5,423.8
1960
526.4
Product, 1959-2005
2,501.8
1984
3,933.2
5,813.6
1961
544.7
(billions of dollars,
2,560.0
1985
4,220.3
6,053.7
1962
585.6
except as noted;
2,715.2
1986
4,462.8
6,263.6
1963
617.7
quarterly data at
2,834.0
1987
4,739.5
6,475.1
1964
663.6
seasonally adjusted
2,998.6
1988
5,103.8
6,742.7
1965
719.1
annual rates; RGDP
3,191.1
1989
5,484.4
6,981.4
1966
787.8
in billions of chained
3,399.1
1990
5,803.1
7,112.5
1967
832.6
3,484.6
1991
[2000] dollars)
5,995.9
7,100.5
1968
910.0
3,652.7
1992
6,337.7
7,336.6
1969
984.6
3,765.4
1993
6,657.4
7,532.7
1970
1,038.5
3,771.9
1994
7,072.2
7,835.5
1971
1,127.1
3,898.6
1995
7,397.7
8,031.7
1972
1,238.3
4,105.0
1996
7,816.9
8,328.9
1973
1,382.7
4,341.5
1997
8,304.3
8,703.5
1974
1,500.0
4,319.6
1998
8,747.0
9,066.9
1975
1,638.3
4,311.2
1999
9,268.4
9,470.3
1976
1,825.3
4,540.9
2000
9,817.0
9,817.0
1977
2,030.9
4,750.5
2001
10,128.0
9,890.7
1978
2,294.7
5,015.0
2002
10,469.6
10,048.8
1979
2,563.3
5,173.4
2003
10,960.8
10,301.0
1980
2,789.5
5,161.7
2004
11,712.5
10,703.5
1981
3,128.4
5,291.7
2005
12,455.8
11,048.6
1982
3,255.0
5,189.3](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F50fbc884-4de6-47bb-a045-4d2caa13a541%2Fc632f5b9-a09b-48b1-9173-f449daa76576%2Fy1wbu9_processed.png&w=3840&q=75)
Transcribed Image Text:TABLE 3.8
Year
NGDP
RGDP
Year
NGDP
RGDP
Nominal and Real
1959
506.6
Gross Domestic
2,441.3
1983
3,536.7
5,423.8
1960
526.4
Product, 1959-2005
2,501.8
1984
3,933.2
5,813.6
1961
544.7
(billions of dollars,
2,560.0
1985
4,220.3
6,053.7
1962
585.6
except as noted;
2,715.2
1986
4,462.8
6,263.6
1963
617.7
quarterly data at
2,834.0
1987
4,739.5
6,475.1
1964
663.6
seasonally adjusted
2,998.6
1988
5,103.8
6,742.7
1965
719.1
annual rates; RGDP
3,191.1
1989
5,484.4
6,981.4
1966
787.8
in billions of chained
3,399.1
1990
5,803.1
7,112.5
1967
832.6
3,484.6
1991
[2000] dollars)
5,995.9
7,100.5
1968
910.0
3,652.7
1992
6,337.7
7,336.6
1969
984.6
3,765.4
1993
6,657.4
7,532.7
1970
1,038.5
3,771.9
1994
7,072.2
7,835.5
1971
1,127.1
3,898.6
1995
7,397.7
8,031.7
1972
1,238.3
4,105.0
1996
7,816.9
8,328.9
1973
1,382.7
4,341.5
1997
8,304.3
8,703.5
1974
1,500.0
4,319.6
1998
8,747.0
9,066.9
1975
1,638.3
4,311.2
1999
9,268.4
9,470.3
1976
1,825.3
4,540.9
2000
9,817.0
9,817.0
1977
2,030.9
4,750.5
2001
10,128.0
9,890.7
1978
2,294.7
5,015.0
2002
10,469.6
10,048.8
1979
2,563.3
5,173.4
2003
10,960.8
10,301.0
1980
2,789.5
5,161.7
2004
11,712.5
10,703.5
1981
3,128.4
5,291.7
2005
12,455.8
11,048.6
1982
3,255.0
5,189.3
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 9 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education