1. (40 points) Go to FRED – https://fred.stlouisfed.org/ and find data on the unemployment rate (UNRATE) and a measure of the price level, the personal consumption expenditure: chain-type price index (PCECTPI). For both series, choose the frequency as “quarterly”, and for the price index series, choose units as “Percent change from year ago”.  Download both series onto a spreadsheet.

Create a scatter plot of the quarterly unemployment and inflation data, from 2000 to the most recent available data. Identify the point that represents the most recent data on inflation and unemployment. Do the data support a Phillips curve-like inverse relationship between unemployment and inflation?

2.      (30 points) Go to FRED – https://fred.stlouisfed.org/ and find data on Interest on Reserve Balances (IROB), Federal Funds Rate Upper Limit (DFEDTARU), Federal Funds Rate Lower Limit (DFEDTARL), from July 29, 2021 and March 20, 2024. Data is Daily 7-Day.

a.       On what dates did the FED change the Federal Funds Rate Upper and Lower Limit?

• On what dates did the FED change the Interest on Reserve Balances?
  • Do you see any pattern between changes in the interest rate on reserve balances and the Federal Funds rate? Can you explain the reason behind this pattern?

• (30 points) Read the press release of the Federal Open Market Committee of March 20, 2024:

1. What is the Fed’s view economic activity, employment, and inflation?
   1. What are the goals of the Fed with respect to employment and inflation?
   1. What did the Fed decide to do with the federal funds rate?
   1. Is the Fed planning to change the federal funds rate?
   1. What is the Fed’s plan on Treasury securities and agency mortgage-backed securities?
   1. What is the Fed most concerned about?

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