MONEY SUPPLY AND FINANCIAL MEASURES COMP,Calculate the year-to-year changes in the Federal funds rate. 2. Compute the average growth rate or average year-to-year change for each of the variables from your calculations in (1) and (2). 3. Create a correlati

Calculate the year-to-year changes in the Federal funds rate.
2. Compute the average growth rate or average year-to-year change for each of the variables from your calculations in (1) and (2).
3. Create a correlation matrix using the results from (1) and (2). (In Excel, go to Tools>Data Analysis>Correlation.)
4. Using the correlation matrix, discuss the relationships between:
a. The rates of change in M1, M2, and the yearly changes in inflation. 
b. The year-to-year changes in the Fed Funds rate and CPI. 
c. Consumer credit to the rate of change in M2 and the growth rate of GDP. 
d. The rate of change in M2 and the growth rate of the S&P 500 index. 
5. Graph the growth rates of the variables and discuss noticeable time trends.
6. Apply OLS regression with money supply measures and inflation. (use money supply measures as explanatory variables) Comment on the relationship that you find. Is it as expected?

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