Plot a graph of quarterly data for real GDP and full-employment GDP from 1970 to the present. (In the FRED database, full-employment GDP is called Real Potential GDP, FRED variable GDPPOT.) Which variable is “smoother”? How would you characterize the volatility of real GDP before 1980 compared with after 1980? From 1950 to 2010, how would you characterize the overall movements in the growth rate of real full-employment GDP?

Real Gross Domestic Product:

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FRED 24,000 22,000 Billions of Chained 2017 Dollars 20,000 18,000 16,000 14,000 12,000 10,000 8,000 Real Gross Domestic Product 6,000 4,000 1970 1975 1980 1985 1990 1960 1000 1995 2000 2005 2010 2015 2020