Plot the 12-month percentage growth rates in real GDP and in total real government purchases from 1948 to 2015. Calculate these growth rates from quarterly data.

(a) Does there appear to be any relationship between the growth rates in GDP and in government purchases?

(b) What does your answer to part (a) tell you about the role in business cycles of fluctuations in government purchases?

Answer this question using the Federal Reserve Bank of St. Louis’s FRED database, accessible at http://research.stlouisfed.org/fred2/