THE ECONOMICS OF MONEY,BANKING, AND FINANCIAL MARKETS 48

16 PA R T I Introduction Q U A N T I TAT I V E P R O B L E M S CANSIM Questions The following table lists monthly foreign exchange rates between the U.S dollar and the Canadian dollar (in $/US$) for 2008 (this is CANSIM II series V41589522) January February March April May June July August September October November December 1.011132 0.999086 1.002025 1.013886 0.999371 1.016733 1.012695 1.054395 1.058295 1.184750 1.218174 1.234500 a Which month would have been the best month to convert Canadian dollars into U.S dollars? Which month would have been the worst? b Did the Canadian dollar appreciate or depreciate in 2008? c What was the percentage appreciation or depreciation of the Canadian dollar? d If you convert the monthly observations into an annual observation (by taking the arithmetic average), how representative will the annual observation be of the exchange rate during 2008? *2 The following table lists monthly stock prices in Canada as measured by the S&P/TSX Composite Index (this is CANSIM II series V122620) for 2008 January February March April May June July August September October November December 13 13 13 13 14 14 13 13 11 9 155.10 582.69 350.13 937.04 714.73 467.03 592.91 771.25 752.90 762.76 270.62 987.70 a Which month would have been the worst month to buy the index? b What was the percentage decline in the index from January to December? Get the monthly data for 1970 to 2009 on the M3 (gross) monetary aggregate (CANSIM series V41552794) from the Textbook Resources area of the MyEconLab a Calculate the money growth rate over the entire period and present a time series plot of the series (that is, graph the money growth rate series against time) b Calculate the average monetary growth rate and its standard deviation over each of the last four decades c Which decade had the lowest money growth? The highest? d Which decade had the lowest money growth volatility? The highest? WEB EXERCISES In this exercise we will practise collecting data from the web and graphing it using Excel Use the example on page 14 as a guide Go to www.forecasts.org/data/index.htm, click on Stock Index Data at the top of the page, and then choose the U.S Stock Indices Monthly option Finally, choose the Dow Jones Industrial Average option a Move the data into an Excel spreadsheet b Using the data from part (a), prepare a graph Use the graphing wizard to properly label your axes In Web Exercise you collected and graphed the Dow Jones Industrial Average This same site reports forecast values of the DJIA Go to www.forecasts org Click on the Dow Jones Industrials link under Month Forecasts in the far left column a What is the Dow forecast to be in three months? b What percentage increase is forecast for the next three months? Be sure to visit the MyEconLab website at www.myeconlab.com.This online homework and tutorial system puts you in control of your own learning with study and practice tools directly correlated to this chapter content On the MyEconLab website you will find the following appendix for this chapter: Appendix 1.1: Defining Aggregate Output, Income, the Price Level, and the Inflation Rate