1. Go to https://fred.stlouisfed.org/series/TB3MS#0 Under "Money, Banking, & Finance," select "Interest Rates" and then select the three-month Treasury-bill series (secondary market). Describe how this rate has changed in recent months. Using the information in this chapter, explain why the interest rate changed as it did.

i) use the monthly data for the last five years;

ii) the producer price index data is the prices category

2. Using the same website, retrieve data at the beginning of the last 20 quarters for interest rates (based on the three-month Treasury-bill rate) and the producer price index for all commodities (under "Prices") and place the data in two columns of an Excel spreadsheet. Derive the change in interest rates on a quarterly basis. Then derive the percentage change in the producer price index on a quarterly basis, which serves as a measure of inflation. Apply regression analysis in which the change in interest rates is the dependent variable and inflation is the independent variable (see Appendix B for information about applying regression analysis). Explain the relationship that you find. Does it appear that inflation and interest rate movements are positively related?

i) use the monthly data for the last five years;

ii) change in interest rates is nominal, while for PPI you will need to calculate percentage change.