Go to the Federal Reserve Bank of Saint Louis FRED database (https://fred.stlouisfed.org/). Search for “unemployment rate” in the search bar. Then, click on the series called “seasonally adjusted” under Civilian Unemployment Rate. Select the maximum amount of data by clicking on “max.” Then, click on “Edit Graph.” Under “Modify frequency” select “quarterly” and close the “Edit Graph” menu. Take a screenshot of this graph and paste it in the same Word file you pasted in the earlier graph.
Now, return to the main page of FRED and search instead for “Federal Funds Rate.” Click on “Effective Federal Funds Rate.” In the screen that follows you’ll have a graph of the U.S. federal funds rate. Select once more the “max” option. Then, click on “Edit Graph.” Under “Modify frequency” select “quarterly” and close the “Edit Graph” menu. Take a screenshot of this graph and paste it in the same Word file you pasted in the earlier graph.
In both graphs, the shaded areas denote recessionary periods. Moreover, we have both series at quarterly frequency, so the behavior of one can be compared to that of the other.
In the remainder of the Word file, evaluate the following. What relationship do you see, if any, between the federal funds rate and the unemployment rate? Does any one relationship change in recessions versus expansions? Why do you think there is or isn’t any relationship between these variables? Are there any particular periods during which the behavior of these variables seems abnormal and/or exhibits more of a pattern than average or less of a pattern than average, conditional on there being a pattern to begin with? This is an essay question, so your response should be in that spirit. Your response should be single spaced, 250 words minimum, 300 words maximum.