The following table gives data on gross domestic product (GDP) for the United States for the...

  

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The following table gives data on gross domestic product (GDP) for the United States for the years 1959-2005 (in billions of dollars). NGDP stands for nominal or current GDP whereas RGDP is real or constart-dollar GDP. Year 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 NGDP 506.6 526.4 544.7 585.6 617.7 663.6 719.1 787.8 832.6 910.0 984.6 1.038.5 1.127.1 1,238.3 1,382.7 1,500.0 1,638.3 1,825.3 2,030.9 2,294.7 2,563.3 2,789.5 3,128.4 3.255.0 3.536.7 RGDP 2.441.3 2.501.8 2,560.0 2,715.2 2,834.0 2.998.6 3,191.1 3,399.1 3,484.6 3.652.7 3,765.4 3,771.9 3,898.6 4,105.0 4,341.5 4,319.6 4,311.2 4,540.9 4,750.5 5,015.0 5,173.4 5,161.7 5,291.7 5.189.3 5.423.8 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 3,933.2 4,220.3 4,462.8 4,739.5 5,103.8 5,484.4 5,803.1 5,995.9 6,337,7 6,657.4 7,072.2 7,397.7 7,816.9 8.304.3 8,747.0 9,268.4 9,817.0 10,128.0 10,469.6 10,960.8 11,712.5 12,455.8 5,813.6 6,053.7 6,263.6 6,475.1 6,742.7 6,9814 7,112.5 7,100.5 7.336.6 7,532.7 7.835.5 8,031.7 8,328.9 8.703.5 9,066.9 9,470.3 9,817.0 9,890.7 10,048.8 10,301.0 10,703.5 11,048.6 (a) Plot the GDP data in current and constant (2000) dollars against time. Note put GDP on the Y-axis and time on the X-axis. (b) Letting Y denote GDP and X times (measured chronologically starting with I for 1959, 2 for 1960, through 47 for 2005), see if the following model fits the GDP data: Y = B + BX +u, Estimate the model for both current and constant dollar GDP. (c) How would you interpret 3? (d) If there is a difference between B estimated for current-dollar GDP and that estimated for constant-dollar GDP, what explains the difference? (e) From your results what can you say about the nature of inflation in the United States over the sample period? The following table gives data on gross domestic product (GDP) for the United States for the years 1959-2005 (in billions of dollars). NGDP stands for nominal or current GDP whereas RGDP is real or constart-dollar GDP. Year 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 NGDP 506.6 526.4 544.7 585.6 617.7 663.6 719.1 787.8 832.6 910.0 984.6 1.038.5 1.127.1 1,238.3 1,382.7 1,500.0 1,638.3 1,825.3 2,030.9 2,294.7 2,563.3 2,789.5 3,128.4 3.255.0 3.536.7 RGDP 2.441.3 2.501.8 2,560.0 2,715.2 2,834.0 2.998.6 3,191.1 3,399.1 3,484.6 3.652.7 3,765.4 3,771.9 3,898.6 4,105.0 4,341.5 4,319.6 4,311.2 4,540.9 4,750.5 5,015.0 5,173.4 5,161.7 5,291.7 5.189.3 5.423.8 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 3,933.2 4,220.3 4,462.8 4,739.5 5,103.8 5,484.4 5,803.1 5,995.9 6,337,7 6,657.4 7,072.2 7,397.7 7,816.9 8.304.3 8,747.0 9,268.4 9,817.0 10,128.0 10,469.6 10,960.8 11,712.5 12,455.8 5,813.6 6,053.7 6,263.6 6,475.1 6,742.7 6,9814 7,112.5 7,100.5 7.336.6 7,532.7 7.835.5 8,031.7 8,328.9 8.703.5 9,066.9 9,470.3 9,817.0 9,890.7 10,048.8 10,301.0 10,703.5 11,048.6 (a) Plot the GDP data in current and constant (2000) dollars against time. Note put GDP on the Y-axis and time on the X-axis. (b) Letting Y denote GDP and X times (measured chronologically starting with I for 1959, 2 for 1960, through 47 for 2005), see if the following model fits the GDP data: Y = B + BX +u, Estimate the model for both current and constant dollar GDP. (c) How would you interpret 3? (d) If there is a difference between B estimated for current-dollar GDP and that estimated for constant-dollar GDP, what explains the difference? (e) From your results what can you say about the nature of inflation in the United States over the sample period?