Problem 4

For this question, you will need to go to the FRED (Federal Reserve Economic Data) website here and download GDP data from January 1, 1947 to July 1, 2021. In the search bar of the FRED website, type “GDP,” press enter, and click on the first option (which should be “Gross Domestic Product” Billions of Dollars, Quarterly, Seasonally Adjusted Annual Rate). Download the dataset and load it into R to answer the following questions:

a. Does this time-series data exhibit autocorrelation (in answering this question, make sure to include and discuss the ACF figure)?

b. Convert the GDP data into a percent change (before doing this, make sure that your data is time sorted). Does this new variable exhibit autocorrelation (again, show and discus the ACF graph).

Dataset