Question: As defined in Exercise 1, a rate cycle is a period of monetary policy during which the federal funds rate moves from its low point

As defined in Exercise 1, a "rate cycle" is a period of monetary policy during which the federal funds rate moves from its low point toward its high point, or vice versa, in response to business cycle conditions. Go to the St. Louis Federal Reserve FRED database, and find data on the federal funds rate (FEDFUNDS), bank reserves (TOTRESNS), bank deposits (TCDSL), commercial and industrial loans (BUSLOANS), real estate loans (REALLN), real business fixed investment (PNFIC96), and real residential investment (PRFIC96). Use the frequency setting to convert the federal funds rate, bank reserves, bank deposits, commercial and industrial loans, and real estate loans data to "quarterly," and download the data.
a. When did the last rate cycle begin and end? Is this rate cycle a contractionary or an expansionary rate cycle?
b. Calculate the percentage change in bank deposits, bank lending, real business fixed investment, and real residential (housing) investment over this rate cycle.
c. Based on your answers to parts (a) and (b), how effective was the bank lending channel of monetary policy over this rate cycle?

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a The last full rate cycle as of June 2014 was the period from 2007Q2 to 2009Q1 The federal funds ra... View full answer

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