Go to the St. Louis Federal Reserve FRED database, and find data on the personal consumption expenditure price index (PCECTPI), a measure of the price level; real compensation per hour (COM-PRNFB); the nonfarm business sector real output per hour (OPHNFB), a measure of worker productivity; the price of a barrel of oil (MCOILWTICO); and the University of Michigan survey of inflation expectations (MICH). Use the frequency setting to convert the oil price and inflation expectations data series to "Quarterly," and use the units setting to convert the price index to "Percent Change from Year Ago." Download all of the data into a spreadsheet, and convert the compensation and productivity measures to a single indicator. To do this, for each quarter, take the compensation number and subtract the productivity number. Call this difference "Net Wages Above Productivity."
a. Calculate the change in the inflation rate over the four most recent quarters of data available, and the four quarters prior to that.
b. Calculate the changes in net wages above productivity, the price of oil, and inflation expectations over the four most recent quarters of data available, and the four quarters prior to that.
c. Are your results consistent with what you would expect? How do your answers to part (b) help explain, if at all, your answer to part (a)? Explain using the short-run aggregate supply curve.