Econ 104-01: Introduction to Macroeconomics.Problem set 1Prof.

LarudeeSpring 2016

Problem set 1: Real and current-dollar GDP and the GDP deflator (5% of your grade)
Due Friday, Feb. 5. Your TA will let you know whether you need to turn in a hard copy in discussion
section or submit it on Moodle, or both; he or she should let you know on Jan. 29.
In addition to helping you understand real vs. nominal GDP, this assignment should help you learn to use
primary sources, to create good-looking graphs using Excel, to do a few other basic Excel moves for
managing data, to copy graphs and tables into a Word document, and to write about data.
Always put this heading at the top of the page (does not need to be in boldface):
Your name
Your TAs name
The number or meeting day/time of your discussion section
Problem set 1, [the due date]
Please start this assignment before Jan. 29; try to finish it by Monday evening, Feb. 1, leaving you lots of
time to get help from the IT people, your TA, or a tutor at the Learning Resources Center, 10th floor of the
library. Take a printout of this assignment with you when you seek help. Instructions for Mac (Excel 2008)
are on pp. 1-2. Excel 2013 for Windows supplementary instructions are on p. 3, but do also read pp. 1-2.
1) Find annual data (both current-dollar and real, or chained-dollar) for US GDP for 1929 to 2014. Go
to the Bureau of Economic Analysis website: www.bea.gov and click on Gross Domestic Product. Then
click on Current-dollar and real GDP (Excel) and the file gdplev.xls should download automatically.
2) First, some housekeeping chores:
Delete the quarterly data on this worksheet by putting your cursor on the lettered cells that head the
columns you want to delete (E, F, and G), and choosing DELETE.
Make a backup copy of the worksheet in case you make a mistake. To do this on a Mac, choose
Edit/Move or copy sheet
and then, in the dialog box, click the box for Create a copy. Inside the inner box, choose where to put
the copied sheet. Save the Excel workbook again. Double click on the tab below each worksheet and give it
a label for example, call the original GDP DATA and the copy GDP DATA BACKUP.
Select all of row 7 by putting your cursor on the row number 7 in the column of numbers at left.
This should highlight the whole row.
THEN:
From the menu, click on Edit/Delete... [NOT Delete sheet!!]
Row 7 disappears, and now row 8 has become row 7, so just click on Delete again. Now the row headings
are just above the data, with no row of space in between. Thats what you want. Save the file.
3) The goal is to make two charts on which both real (chained-dollar) GDP and nominal (current-dollar)
GDP appear (one for 1929-2014, and one for 1990-2014), and to put them into a Word document in
which you also write about key features of the charts.
Select the whole array (rectangle) of cells with the annual data (both current-dollar and chained-dollar),
including the two column headings and the blank cell to their left (so cells A6:C92, if you followed all the
instructions above. Now choose
Charts/XY Scatter
and choose the unsmoothed line, without point markers. This should give you a chart with two lines: real
and current-dollar GDP from 1929 to 2014. (Do NOT use the line chart type; it is usually problematic
if youre graphing two data series.)
Then move the chart from the data worksheet to a separate one. Do this by highlighting the chart frame
and choosing
Chart/Move Chart
Choose New sheet and give the sheet a short label that describes its content.

Econ 104-01: Introduction to Macroeconomics.Problem set 1Prof. LarudeeSpring 2016

In the new sheet, label the tab below. (The chart will be Figure 1 in your Word document; call it that now.)
OPTIONAL: This is a chance to practice making a chart look professional. It is usually a good idea
to increase the font size to around 18 (use your judgment). Click on the vertical scale and choose
Font in the box that comes up, and then a number; again, 18 usually looks good. Do the same with
the horizontal scale. If the years or numbers start to overlap when you do this, choose Scale and
double the Major unit. Also, double-click on the graph line and then change the color of the
lines to black (your Word document will probably be printed on a black and white printer), and
make one of the lines thinner than the other so that the reader knows which is which. Do this by
clicking on one of the lines; in the box, choose Line (again, this is on a Mac) and choose black,
and then choose the Weights and arrows tab above and set the line to 3 or 4 point whatever
looks good to you. Give the other line a different setting. By choosing Style or Dashed you can
change to a different style line. The change will automatically change the legend.
Always label the units on the vertical scale. (If you do, you can sometimes delete the legend
though not in this case, since it is needed to explain which line is current-dollar and which real
GDP). In this case the units are Billions of US dollars (current or chained), so (on a Mac) choose
View/Formatting Palette and then enter a label for the vertical scale. If you would like to move the
legend to below or above the chart (so you can increase the font size and it still looks OK), double
click the legend, choose Placement and then choose a location. Save the file.
4) To get a close-up picture of the recent period, first make a copy of the chart worksheet, again using
Edit/Move or Copy Sheet
and label the sheet by typing a name in the tab below. Then click on the horizontal scale and change the
minimum year to 1990. The chart will change automatically. Label this Figure 2 on the tab. Save the file.
Now copy each chart into a Word document, using
Edit/Copy
Edit/Paste special
Picture (from the menu)
Label each chart (Figure 1, Figure 2) followed by a caption (phrase or sentence). You can get ideas for
captions by looking at graphs in the textbook. A caption should make clear what is in the figure.
5) In the Excel worksheet, calculate the GDP deflator (one kind of general price index) by doing this:
In cell E7, enter
=100*B7/C7
and hit Return. Select cell B7, click on the BRUSH icon, and click on E7. Now put the cursor over the
lower right corner of cell E7 and double-click. The formula should automatically fill all the way down to the
bottom row (the year 2014). Copy cells A7:A8 and paste them into cells D7:D8. Select cells D7:D8 and
then place the cursor over the lower right corner and double-click. The years should fill into the column,
down to 2014. Save the file. You are welcome to make a chart of the GDP deflator, the measure of
inflation used for GDP; it will look like Figure 5.6 (which, however, uses quarterly data). Call yours Fig. 3.
Write 200-300 words (1.5 spaced), making observations about the data. Answer these questions:
1. During what years was rising real GDP interrupted by a downturn? (When were there recessions?)
Be as specific as you can, referring to specific years or decades, and the level of real GDP; to do this you
need to understand how many billions or trillions of dollars each number refers to.
2. Why is the current-dollar GDP line steeper (rising faster) than the real GDP line? (Hint: think about
price changes.)
3. What base year is used for real GDP? Does real GDP equal current-dollar GDP in that year? Is the GDP
deflator 100 in that year?
At the bottom of your assignment, type Works cited, and below that, cite the source of the data (not just
the URL). Correct citations of government sources in Chicago Manual of Style format begin with U.S.,
then the name of the overall agency (the full name of the BEA), then the year (it is listed in the first row of

Econ 104-01: Introduction to Macroeconomics.Problem set 1Prof. LarudeeSpring 2016

the table), then the name of the specific table (the first row of the worksheet, in this case). End with
Available at and type the URL.
Supplementary instructions for Excel 2013 for Windows (after downloading gdplev.xls):
Click on Enable editing (from the colored row that begins PROTECTED VIEW).
Select all of row 7 by putting your cursor on the 7 in the column of numbers at left.
This should highlight the whole row.
THEN:
From the menu (toward the right in the box Insert Delete Format, click on Delete.
Row 7 disappears, and now row 8 has become row 7, so just click on Delete again.
Now you the row headings are just above the data, with no row of space in between. Thats what you want.
Select the years and the two columns of data this way:
Put your cursor in cell A6 and drag it to the bottom right corner of the data (cell C92, if youve exactly
followed all the instructions).
Choose INSERT (second menu item from the left) and then go to the center of the row of icons, where
the charts are. Do NOT choose the line format (that looks like a chain-link fence). Click on the axes with
the dots the last choice, bottom row of icons in the chart section.
Now choose the last format the straight line segments with no markers (not the bubbles).
TO MOVE THE CHART TO A SEPARATE WORKSHEET:
Click on the right-hand icon Move Chart Location.
Exactly as on a Mac, then click the little box New sheet and give the new sheet a short informative name,
such as Figure 1 GDP.
Go ahead and improve the appearance of the chart by clicking on various labels one by one words or
numbers and increasing their font size to something like 18.
To copy the chart worksheet to another worksheet, choose these, in sequence:
HOME tab
Cells group
Format
Organize sheets
Move or copy sheet
Be sure to click Create a copy in the box that comes up if you dont, you wont create a new worksheet. Then tell
Excel where you want to put it. After that, you probably want to click (twice) on the tab and give the new
chart worksheet a different name, such as Figure 2 GDP.
In the Excel worksheet, make the following calculations:
A. In cell D7, enter
=100*B7/C7
and hit Return. Then select cell B7, click on the BRUSH icon, and click on D9. and use and put the
cursor over the lower right corner of it and double-click. The formula should automatically fill all the way
down to the bottom row (the year 2014).