Go to the FRED database operated by the Federal Reserve Bank of St. Louis. Find annual data for personal consumption expenditures and gross private domestic investment as well as for real GDP. The data are measured in real dollars. Place values starting in 1960 and ending with the most recent year of data in a spreadsheet. (FRED allows you to directly download to a spreadsheet.) As of the time of writing the series names are: Real GDP (Chained 2012 dollars), GDPCA; Real Personal Consumption Expenditures (Chained 2012 dollars), PCECCA; Real Gross Private Domestic Investment (Chained 2012 dollars), GPDICA. You should be able to search these names but be careful to download the levels of these variables at an annual rate. Pay attention to whether the variables are measured in millions or billions of dollars.

a. On average, how much larger is consumption than investment? Calculate both as a percent of GDP.

b. Compute the change in the levels of consumption and investment from one year to the next, and graph them for the period 1961 to the latest available date. Are the yearto-year changes in consumption and investment of similar magnitude?

c. Compute the annual percentage change in real consumption and real investment from 1961. Which is more volatile?