Stock Prices: S&P 500
Exercises

Questions and Exercises

1. Briefly describe how you think the OPEC oil price shock in 1974 affected the S&P 500 index during that time. Explain your reasoning using the micro and macroeconomic tools that you have developed. Access the data set for the S&P 500 and plot the total return during 1973 and 1974. Do the data support your description?

2. The S&P 500 is a component of the Index of Leading Economic Indicators. Briefly explain why the S&P 500 is a leading indicator of GDP and other economic activity. Was the performance of the S&P 500 during the three U.S. recessions since 1980 consistent with the S&P 500 being a leading indicator? Why?

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