Go to the St. Louis Federal Reserve FRED database, and find data on real personal disposable income (DPIC96), a measure of household net worth (TNWBSHNO), a measure of the price level, the personal consumption expenditure price index (PCECTPI), the University of Michigan consumer sentiment index (UMCSENT), personal consumption expenditures (PCEC), and real GDP (GDPC1).

Convert the (UMCSENT) data to “Quarterly” using the frequency setting. Download all the data onto a spreadsheet, and convert the household net worth series to real household net worth. To do this, for each quarter, take household net worth and divide by the price index, then multiply by 100.

(Note that you may have to adjust the rows of the net worth data series to align with the appropriate quarters of the other data.)

a) Calculate the level change in real GDP over the most recent four quarters of data available and over the previous four quarters before that.

b) Calculate the level change in real personal disposable income, the change in real household net worth, the change in consumer confidence, and the change in personal consumption expenditures 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 IS and AD curves.