If we consider this real interest rate as the main interest rate that the Fed targets, do you think the Fed played a role in causing the recession, or trying to prevent it, or neither?  Explain your reasoning.  If you think the Fed played a role, what do you think was the Fed's motivation?  Explain.

 

During the recession, what type of policy (expansionary, contractionary, or neutral) did the Fed implement?  Explain your reasoning and cite the data.

Do you think the Fed acted in a socially responsible way? Explain.

 

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% Chg, from Yr. Ago of (%-Index 1982-1984-100) 40 30 20 10 -10 Federal Funds Effective Rate-Consumer Price Index for All Urban Consumers: All Items in U.S. City Average M 1971 1972 1973 1974 Sources: Board of Governors; BLS 1975 1976 % Chg, from Yr. Ago of (%-Index 1982-1984-100) 40 30 20 10 -10 Federal Funds Effective Rate-Consumer Price Index for All Urban Consumers: All Items in U.S. City Average M 1971 1972 1973 1974 Sources: Board of Governors; BLS 1975 1976

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