Table 1 Cyclical Behavior of U.S. Production Inputs Deviations From Trend of Input Variables Quarterly, 1954-1989 Cross Correlation of Real GNP With Volatility Variable x (% Std. Dev.) x(1-5) x(1-4) x(1-3) x(1-2) x(1-1) X(1 ) x(1+1) x(1+2) x(1+3) x(1+4) x(1+5) Real Gross National Product -0.03 0.15 0.38 0.63 0.85 1.00 0.85 0.63 0.38 5 -0.03 Labor Input Hours (Household Survey) 1.47 -0.10 0.05 0.23 0.44 0.69 0.86. 0.86 0.75 0.59 0.38 0.18 Employment 1.06 -0.18 -0.04 0.14 0.36 0.61 0.82 .0.89 0.82 0.67 0.47 0.25 Hours per Worker 0.54 0.08 0.21 0.35 0.49 0.66 :0.71 0.59 0.43 0.29 0.11 -0.02 Hours (Establishment Survey) 1.65 -0.23 -0.07 0.14 0.39 0.66 0.88 0.92 0.81 0.64 0.42 0.21 GNP/Hours (Household Survey) 0.88 0.11 0.21 0.34 0.48 0.50 0.51 0.21 -0.02 -0.25 -0.34 -0.36 GNP/Hours (Establishment Survey) 0.83 0.40 0.46 0.49 0.53 0.43 0.31 -0.07 -0.31 -0.49 -0.52 -0.50 Average Hourly Real Compensation 0.91 0.30 0.37 0.40 0.42 0.40 0.35 0.26 0.17 0.05 -0.08 -0.20 (Business Sector) Capital Input Nonresidental Capital Stock* 0.62 -0.58 -0.61 -0.51 -0.48 -0.31 -0.08 0.16 0.39 0.56 0.66 0.70 Structures 0.37 -0.45 -0.51 -0.55 -0.53 -0.44 -0.29 -0.10 0.09 0.25 0.38 0.45 Producers' Durable Equipment 0.99 -0.57 -0.58 -0.53 -0.41 -0.22 0.02 0.26 0.47 0.62 0.70 0.71 Inventory Stock (Nonfarm) 1.65 - -0.37 -0.33 -0.23 -0.05 0.19 0.50 0.72 0.83 0.81. 0.71 0.53 *Based on quarterly data, 1954:1-1984:2. Source of basic data: Citicorp's Citibase data bankTable 2 Cyclical Behavior of U.S. Output and Income Components Deviations From Trend of Product and Income Variables Quarterly, 1954-1989 Cross Correlation of Real GNP With Volatility Variable x (% Std. Dev.) x(1-5) x(1-4) x(t-3) x(1-2) x(t-1) x(1) x(1+1) x (1+2) x(1+3) x(1 +4) x(1+5) Real Gross National Product 1.71 -0.03 0.15 0.38 0.63 0.85 1.00 0.85 0.63 0.38 0.15 -0.03 Consumption Expenditures 1.25 0.25 0.41 0.56 0.71 0.81 0.82 0.66 0.45 0.21 -0.02 -0.21 Nondurables & Services 0.84 0.20 0.38 0.53 0.67 0.77 _0.76 0.63 0.46 0.27 0.06 -0.12 Nondurables 1.23 0.29 0.42 0.52 0.62 0.69 0.69 0.57 0.38 0.16 -0.05 -0.22 Services 0.63 0.03 0.25 0.46 0.63 0.73 -0.71 0.60 0.49 0.39 0.23 0.07 Durables 4.99 0.25 0.38 0.50 0.64 0.74 .0.77 0.60 0.37 0.10 -0.14 -0.32 Investment Expenditures 8.30 0.04 0.19 0.39 0.60 0.79 0.91 0.75 0.50 0.21 -0.05 -0.26 Fixed Investment 5.38 0.09 0.25 0.44 0.64 0.83 0.90 0.81 0.60 0.35 0.08 -0.14 Nonresidential 5.18 -0.26 -0.13 0.05 0.31 0.57 0.80 0.88 0.83 0.68 0.46 0.23 Structures 4.75 -0.40 -0.31 -0.17 0.03 0.29 0.52 0.65 0.69 0.63 0.50 0.34 Equipment 6.21 -0.18 -0.04 0.14 0.39 0.65 0.85 0.90 0.81 0.62 0.38 0.15 Residential 10.89 0.42 0.56 0.66 0.73 0.73 - 0.62 0.37 0.10 -0.15 -0.34 -0.45 Government Purchases 2.07 0.00 -0.03 -0.03 -0.01 -0.01 10 05 0.09 0.12 0.17 0.27 0.34 Federal 3.68 0.00 -0.05 -0.08 -0.09 -0.09 0.03 0.06 0.10 0.19 0.24 State & Local 1.19 0.06 0.10 0.17 0.25 0.26 10.25 0.20 0.16 0.19 0.27 0.36 Exports 5.53 -0.50 -0.46 -0.34 -0.14 0.11 0.34 0.48 0.53 0.53 0.53 0.45 Imports 4.92 0.11 0.18 0.30 0.45 0.61 _0.71 0.71 0.51 0.28 0.03 -0.19 Real Net National Income Labor Income 1.58 -0.18 -0.02 0.18 0.42 0.68 -0.88 0.90 0.80 0.62 0.40 0.19 Capital Income * * 2.93 0.10 0.24 0.44 0.63 0.79 0.84 0.60 0.30 0.02 -0.19 -0.29 Proprietors' Income & Misc.t 2.70 0.11 0.24 0.38 0.55 0.62 0.68 0.46 0.29 0.11 0.02 -0.10 Employee compensation is deflated by the implicit GNP price deflator. "This variable includes corporate profits with inventory valuation and capital consumption adjustments, plus rental income of persons with capital consumption adjustment, plus net interest, plus capital consumption allowances with capital consumption adjustment, all deflated by the implicit GNP price deflator. "Proprietors' income with inventory valuation and capital consumption adjustments, plus indirect business tax and nontax liability, plus business transfer payments, plus current surplus of government enterprises, less subsidies, plus statistical discrepancy. Source of basic data: Citicorp's Citibase data bank2. Using the data from Tables 1 and 2 in the paper \"Business Cycles: Real Facts and a Monetary Myth\" in the column labeled $(t) to state whether each of the following variables are pro-cyclical, counter-cyclical or acyclical: (i) investment (ii) wage rate (i.e. average hourly real compensation) (iii) labor hours (iv) capital input Hint: A series is procyclical if its correlation with GDP is positive and is counter-cyclical if its correlation with GDP is negative. A series is acyclical if its correlation with GDP is near zero. Does the model from question 1 seem like it can generate any of these qual- itative features of the data? Explain