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Predictions of inflation, unemployment, and RGDP

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Go to the website: www.bls.gov at (ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt) and (http://stats.bls.gov/cps/cpsaat1.pdf) and www.bea.gov at http://www.bea.gov/bea/dn/gdplev.xls and collect the data on annual average data on CPI index, unemployment rates and real GDP from year 2001 through 2005. The first two url links from bls.gov will provide you the data for CPI index and unemployment rate. The url from www.bea.gov will provide the RGDP data. Illustrate them in a table against the last five years and respond to the following two questions:

a. Calculate the changes in inflation rates, unemployment rates and the RGDP growth rates for the years from Year 2001 through 2005 and illustrate them in a new column at the end of the table of data.

b. Based on those calculations, briefly describe the overall economic performance over the last five years and critically predict about these three macroeconomic variables for the coming years.

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Solution Preview

First, let's take a look at the CPI website. The percent annual change has been calculated for you in the second to last column. They are as follows:

2001 1.6
2002 2.4
2003 1.9
2004 3.3
2005 3.4

So create a table with the years in the left column. Label this column "years." Then make three more columns next to this. Label them CPI (%), unemployment (%), and RDGP. Now make three more columns with the titles "change CPI (%)" "change unemployment (%)"and "change RDGP (%)." The two columns above are your first two ...

Solution Summary

Predictions of inflation, unemployment, and RGDP based on current growth rates

$2.19