Go to the Federal Reserve Bank of St. Louis Bank FRED database and find monthly data on the M2 money supply (M2NS – M2, Billions of Dollars, Monthly, Not Seasonally Adjusted). Put the time series in an Excel spreadsheet. For the money stock compute the monthly percentage change and the percentage change from a year ago. Create two charts with the percent change in the money supply over the period from January 1970 to the most recent month – one chart using monthly percentage change and another chart for the percentage change from a year ago. Explain what these figures show. Do you notice any periods of relatively high money growth? What do you expect to be happening to the rate of inflation as a result of this high money growth? A contractionary monetary policy is designed to do what to the stock of money?
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