Construct a scatter plot of M1 against real GDP for the period 1959–2018.
a) Is there a positive or negative correlation in the scatter plot.
b) Is the correlation you observed in part (a) evidence that money is not neutral? Why or why not?
Hint:
Neutrality of money is the idea that a change in the stock of money affects only nominal variables in the economy such as prices, wages, and exchange rates, with no effect on real variables, like employment, real GDP, and real consumption.
Write-up Guidelines and Assignment Submission
Using this upload box, you will submit a typed, proof-read 1–2 page write-up in MS Word documenting your process and the main findings. If the paper ends up being longer that 1–2 pages, that is fine, but aim for conciseness, if possible. You may use any write-up format of your choice, as long as the style results in a professional-looking document. Use 12-point size font, single spaced. Feel free to add headings and subheadings to structure your document into logical sections.
Since a significant portion of your work for this assignment will be done in MS Excel, please submit your Excel file with the data and graphs, as well.
This short paper is due by Saturday midnight, at the end of the third week.