Some critics argue that the Federal Reserve stoked the housing price bubble after 2000 by keeping monetary policy too simulative. To investigate, first plot from 2000 to 2007 on a quarterly basis the Taylor rule gap – the difference between the Taylor rule and the federal funds rate – as described in Chapter 18 Data Exploration Problems 1 and 2. Add to this plot on the right scale an index of U.S. housing prices (FRED code: SPCS20RSA).Does the evidence support the critics’ claim? What other evidence might be sought?
Answer to relevant QuestionsList the financial transactions you have engaged in over the past week. Howmight each one have been carried out 50 years ago? If time has value, why are financial institutions often willing to extend you a 30-year mortgage at a lower annual interest rate than they would charge for a one-year loan? To begin using FRED, plot the consumer price index (FRED code: CPIAUCSL) and find the date and level of the latest observation. Then plot the inflation rate measured as the percent change from a year ago of this index.You receive a check drawn on another bank and deposit it into your checking account. Even though this is a “demand deposit” the funds are not immediately available for your use. Why? Would your answer change if the check ...Despite the efforts of the United States Treasury and the Secret Service, someone discovers a cheap way to counterfeit $100 bills. What will be the impact of this discovery on the economy?
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