Question 1. (Excel exercise) The Federal Reserve Bank of St.

Louis offers a wide range of economic

data at its Web site, called FRED (fred.stlouisfed.org/). Use these data to examine real GDP for
Canada from 1960 to 2011.
a. Download annual data (CANRGDPR) on real GDP from 1960 to 2011. Calculate the annual
growth rates, starting with 1960. Are there years in which real GDP decreased? With what events are
these years associated?
b. Calculate the average rate of real GDP growth for the period from 1960 to the most recent year
available. Calculate the average annual growth rate from 2008 to 2010. How does the growth rate
during this three-year period compare to the average growth rate from 1960 to 2011?

a.

The data and reason for negative growth rate is as follows:

Real GDP Real GDP

in Canada , in Canada ,
Millions of Millions of
2011 U.S. Annual 2011 U.S. Annual
Dollars, Growth Reasons for Dollars, Growth Reasons for
Annual, Not rate of Negative Annual Annual, Not rate of Negative Annual
Seasonally Real Real GDP growth Seasonally Real Real GDP
Year Adjusted GDP rate Year Adjusted GDP growth rate

1960 263862 - 1986 754708 2%

1961 272134 3% 1987 786808 4%

1962 291167 7% 1988 825947 5%

1963 306618 5% 1989 847582 3%

1964 326471 6% 1990 849218 0%

1965 347260 6% 1991 831451 -2% The early 1990s

recession
describes the
period of
economic
downturn
affecting much
of the Western
world in the
early 1990s,
believed to be
caused by
restrictive
monetary policy
enacted by
 central banks
primarily in
response to
inflation
concerns, the
loss of
consumer and
business
confidence as a
result of the
1990 oil price
shock, the end
of the Cold War
and the
subsequent
decrease in
defense
spending, the
savings and loan
crisis and a
slump in office
construction
resulting from
overbuilding
during the
1980s.

1966 370336 7% 1992 838728 1%

1967 381132 3% 1993 858342 2%

1968 399731 5% 1994 899578 5%

1969 419849 5% 1995 924843 3%

1970 432572 3% 1996 939814 2%

1971 450384 4% 1997 979530 4%

1972 474912 5% 1998 1019665 4%

1973 507986 7% 1999 1076071 6%

1974 526735 4% 2000 1132385 5%

1975 536338 2% 2001 1152584 2%

1976 564223 5% 2002 1186292 3%

1977 583735 3% 2003 1208607 2%

 1978 606814 4% 2004 1246315 3%

1979 629903 4% 2005 1283942 3%

1980 643525 2% 2006 1320188 3%

1981 666069 4% 2007 1349232 2%

The early 1980s

recession was a
severe global
economic
recession that
affected much of
the developed
world in the late
1970s and early
1980s.
In the early 1980s,
Canada
experienced higher
inflation, interest
rates, and more
underemployment
than the United
1982 647026 -3% States. 2008 1358525 1%

Financial Crisis
1983 664611 3% 2009 1320897 -3% 2008-09

1984 703254 6% 2010 1363363 3%

1985 736870 5% 2011 1396160 2%

Yes, in the year 1982, 1990 and 2009, there has been negative annual growth rate.

CANRGDPR
(Real GDP in Canada
(DISCONTINUED), Millions of Annual
2011 U.S. Dollars, Annual, Not Growth Event related to negative annual
observation_date Seasonally Adjusted) rate growth rate

The early 1980s recession was a

severe global economic recession
that affected much of the
developed world in the late 1970s
1982-01-01 647026 -2.86% and early 1980s.
 Early 1990s recession in the
1991-01-01 831451 -2.09% United States

2009-01-01 1320897 -2.77% Global Financial Crisis

CANRGDPR
(Real GDP in Canada
(DISCONTINUED), Millions of Annual
2011 U.S. Dollars, Annual, Not Growth Event related to negative annual
observation_date Seasonally Adjusted) rate growth rate

1960-01-01 263862 -

1961-01-01 272134 3.13%

1962-01-01 291167 6.99%

1963-01-01 306618 5.31%

1964-01-01 326471 6.47%

1965-01-01 347260 6.37%

1966-01-01 370336 6.65%

1967-01-01 381132 2.92%

1968-01-01 399731 4.88%

1969-01-01 419849 5.03%

1970-01-01 432572 3.03%

1971-01-01 450384 4.12%

1972-01-01 474912 5.45%

1973-01-01 507986 6.96%

1974-01-01 526735 3.69%

1975-01-01 536338 1.82%

1976-01-01 564223 5.20%

1977-01-01 583735 3.46%

1978-01-01 606814 3.95%

1979-01-01 629903 3.80%

1980-01-01 643525 2.16%

1981-01-01 666069 3.50%

The early 1980s recession was a

severe global economic recession
that affected much of the
developed world in the late 1970s
1982-01-01 647026 -2.86% and early 1980s.

1983-01-01 664611 2.72%

1984-01-01 703254 5.81%

1985-01-01 736870 4.78%

1986-01-01 754708 2.42%

1987-01-01 786808 4.25%

1988-01-01 825947 4.97%

1989-01-01 847582 2.62%

1990-01-01 849218 0.19%

Early 1990s recession in the

1991-01-01 831451 -2.09% United States

1992-01-01 838728 0.88%

1993-01-01 858342 2.34%

1994-01-01 899578 4.80%

1995-01-01 924843 2.81%

1996-01-01 939814 1.62%

1997-01-01 979530 4.23%

1998-01-01 1019665 4.10%

1999-01-01 1076071 5.53%

2000-01-01 1132385 5.23%

2001-01-01 1152584 1.78%

2002-01-01 1186292 2.92%

 2003-01-01 1208607 1.88%

2004-01-01 1246315 3.12%

2005-01-01 1283942 3.02%

2006-01-01 1320188 2.82%

2007-01-01 1349232 2.20%

2008-01-01 1358525 0.69%

2009-01-01 1320897 -2.77% Global Financial Crisis

2010-01-01 1363363 3.21%

2011-01-01 1396160 2.41%

b.

Year Real GDP in Canada, Millions of 2011 U.S. Dollars, Annual, Not Seasonally Adjusted

1960 263862

2011 1396160
The number of Years between 1960 and 2011 is 52 Years

Let the average annual growth rate of real GDP is r% per annum

The average rate of real GDP growth rate for 1960 to 2011 is:

(1396160/263862) = (1+r)^52

1 + r =1.032558303

Hence, r = 0.032558303 or 3.2558303%

Thus, the average annual growth rate of real GDP is 3.2558303% per annum

Year Real GDP in Canada , Millions of 2011 U.S. Dollars, Annual, Not Seasonally Adjusted

2008 1358525

2010 1363363
The number of Years between 2008 and 2010 is 3 Years

Let the average annual growth rate of real GDP is x% per annum
The average rate of real GDP growth rate for 2008 to 2010 is:

(1363363/1358525) = (1+x)^3

1 + x =1.001185665

Hence, x = 0.001185665 or 0.1185665%

Thus, the average annual growth rate of real GDP between 2008 and 2010 is 0.1185665% per
annum

Thus, the average annual growth rate of real GDP from 2006 to 2011 is 27.45994 times of the
average annual growth rate of real GDP between 2008 and 2010

Question 2. The Federal Reserve Bank of St. Louis offers a wide range of economic data at its Web site,
called FRED (fred.stlouisfed.org/) including data for Japan. We can use these data to compare the
behavior of real GDP per capita and inflation in Japan and Canada.

a. Download annual data on real GDP per capita in Japan (JPNRGDPC) and for Canada (CANRGDPC)
from 1960 to 2011. Chart the two data series on the same graph. How does real GDP per capita in Japan
compare to real GDP per capita in Canada? Have there been any changes in the relationship over time?
Briefly explain. (2+2+2=6)

b. Download annual data on the consumer price index for Japan (JPNCPIALLAINMEI) and Canada
(CPALCY01CAA661N) from 1961 to 2019. For both Japan and Canada calculate the inflation rate as the
annual growth rate of the consumer price index. Chart the two data series on the same graph. How does
the inflation rate in Japan compare to the inflation rate in the Canada? In particular, how do the inflation
rates in the two countries compare since 1990? Has either country ever experienced negative inflation
rates?

Ans: Inflatio rate = (CPI this year- CPI last year )/ CPI laast year *100

So as per anual data on consumer price index for Japan and Canada from 1961 to 2019 ; below is
the calculation table of inflation rate of both countries.

observation_d JPNCPIALLAIN CPALCY01CAA6 Japan Canada

ate MEI 61N Inflation rate Inflation rate

1961-01-01 19.29 13.41

1962-01-01 20.61 13.57 6.84 1.21

1963-01-01 22.00 13.80 6.71 1.64

1964-01-01 22.83 14.01 3.80 1.56

1965-01-01 24.35 14.31 6.66 2.14

1966-01-01 25.58 14.74 5.04 3.03

1967-01-01 26.60 15.32 3.99 3.91

1968-01-01 28.02 15.84 5.34 3.39

1969-01-01 29.49 16.33 5.25 3.11

1970-01-01 31.53 16.67 6.92 2.10

1971-01-01 33.55 17.01 6.40 2.01

1972-01-01 35.18 17.76 4.84 4.43

1973-01-01 39.26 19.02 11.61 7.10

1974-01-01 48.38 21.17 23.22 11.29

1975-01-01 54.05 23.49 11.73 10.94

1976-01-01 59.12 25.07 9.37 6.73

1977-01-01 63.94 27.16 8.16 8.33

1978-01-01 66.63 29.43 4.21 8.38

1979-01-01 69.10 32.11 3.70 9.11

1980-01-01 74.48 35.44 7.78 10.35

1981-01-01 78.13 39.85 4.91 12.46

1982-01-01 80.28 44.45 2.74 11.54

1983-01-01 81.80 46.90 1.90 5.51

1984-01-01 83.65 48.88 2.26 4.21

1985-01-01 85.35 51.03 2.03 4.41

1986-01-01 85.86 53.52 0.60 4.88

1987-01-01 85.97 55.91 0.13 4.46

1988-01-01 86.55 58.08 0.68 3.89

1989-01-01 88.52 60.65 2.27 4.41

1990-01-01 91.24 63.25 3.08 4.29

1991-01-01 94.21 67.91 3.25 7.36

1992-01-01 95.87 69.21 1.76 1.93

1993-01-01 97.06 70.21 1.24 1.44

1994-01-01 97.73 69.17 0.70 -1.47

1995-01-01 97.61 70.41 -0.13 1.79

1996-01-01 97.74 71.58 0.14 1.65

1997-01-01 99.45 72.56 1.75 1.38

1998-01-01 100.11 73.70 0.66 1.56

1999-01-01 99.77 74.86 -0.34 1.58

2000-01-01 99.09 76.64 -0.68 2.37

2001-01-01 98.36 78.49 -0.74 2.41

2002-01-01 97.45 80.07 -0.92 2.01

2003-01-01 97.20 81.99 -0.26 2.40

2004-01-01 97.19 83.57 -0.01 1.92

2005-01-01 96.92 85.45 -0.28 2.25

2006-01-01 97.16 86.93 0.25 1.73

2007-01-01 97.22 88.30 0.06 1.57

2008-01-01 98.56 90.15 1.38 2.10

2009-01-01 97.23 90.85 -1.35 0.78

2010-01-01 96.53 91.93 -0.72 1.18

2011-01-01 96.27 94.52 -0.27 2.82

2012-01-01 96.22 96.39 -0.05 1.98

2013-01-01 96.55 97.17 0.35 0.81

2014-01-01 99.22 98.65 2.76 1.52

2015-01-01 100.00 100.00 0.79 1.37

 2016-01-01 99.88 100.81 -0.12 0.81

2017-01-01 100.35 101.96 0.47 1.15

2018-01-01 101.33 103.68 0.98 1.69

2019-01-01 101.82 106.03 0.48 2.27

Graphical representation of Both Japan & Canada Inflation Rate

If we compare both country inflation rate the highest inflation rate of japan in the year 1974 was
23.22 and the canada in the year 1982 was 11.52 . other important point after 1976 japan inflation
rate was less as compare to canada.

Since 1990 Japan had less inflation rate as compare to canada . In this period 1990 to 2019 Japan
had frequently facing negative inflation rate but canada had only one year negative inflation rate the
year was 1994.

Both the countries experienced negative inflation rate .

Japan had a negative experience in the years- 1995, 1999 to 2005, 2009 to 2012 and 2016.

Canada had a negative experience in the year- 1994