Go to the St. Louis Federal Reserve FRED database, and find data on a measure of the price level (PCECTPI), real compensation per hour (COMPRNFB), a measure of worker productivity (OPHNFB), the price of a barrel of oil (OILPRICE), and the University of Michigan survey of inflation expectations (MICH). Convert the oil price and inflation expectations data series to “Quarterly” under the frequency setting, and use the units setting to convert the price index to “Percent Change From Year Ago.” Download all the data onto 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 “Net Wages Above Productivity.”

a) Calculate the change in the inflation rate over the most recent four quarters of data available and over the previous four quarters before that.

b) Calculate the change in net wages above productivity, the price of oil, and inflation expectations over the most recent four quarters of data available and over the previous four quarters before that.

c) Are these results consistent with what you would expect? How do your answers to part (b) above help explain, if at all, the answers to part (a)? Explain as it relates to the short-run aggregate supply curve.