3. Based on the empirical patterns in Figure 3 below, answer the following questions. Figure 3: Interest Rates and Inflation, 2009-2022 Percent(%) 10.00 8.00- 6.00 4.00 2.00- 0.00- -2.00 -FFR -Discount Rate --Inflation Rate 2009m1 2010m1 2011m1 2012m1 2013m1 2014m1 2015m1 bank. 2018m1 2016m1 0 2017mm 1 2019m1 2020m12 2021m1 2022m1 2023m1 a) Would you say the Federal Reserve System had been effective at maintaining a stable price level before 2020? Explain why. b) Does it make sense to you that the discount rate is always above the federal funds rate in Figure 2? Explain why. Use a diagram to show your point if necessary. c) As shown in Figure 2, inflation has increased by a large margin since 2020. Meanwhile, the federal funds rate had been close to zero for a large portion of 2020-2022. Do you see any connections between these two facts? If so, can you identify a possible causal link between the two? Explain as rigorously and concisely as possible.

3. Based on the empirical patterns in Figure 3 below, answer the following questions. Figure 3: Interest Rates and Inflation, 2009-2022 a) Would you say the Federal Reserve System had been effective at maintaining a stable price level before 2020 ? Explain why. b) Does it make sense to you that the discount rate is always above the federal funds rate in Figure 2? Explain why. Use a diagram to show your point if necessary. c) As shown in Figure 2, inflation has increased by a large margin since 2020 . Meanwhile, the federal funds rate had been close to zero for a large portion of 2020-2022. Do you see any connections between these two facts? If so, can you identify a possible causal link between the two? Explain as rigorously and concisely as possible. Based on the empirical patterns in Figure 3 below, answer the following questions. Figure 3: Interest Rates and Inflation, 2009-2022 a) Would you say the Federal Reserve System had been effective at maintaining a stable price level before 2020? Explain why. b) Does it make sense to you that the discount rate is always above the federal funds rate in Figure 2? Explain why. Use a diagram to show your point if necessary. c) As shown in Figure 2, inflation has increased by a large margin since 2020. Meanwhile, the federal funds rate had been close to zero for a large portion of 2020-2022. Do you see any connections between these two facts? If so, can you identify a possible causal link between the two? Explain as rigorously and concisely as possible. 3. Based on the empirical patterns in Figure 3 below, answer the following questions. Figure 3: Interest Rates and Inflation, 2009-2022 a) Would you say the Federal Reserve System had been effective at maintaining a stable price level before 2020 ? Explain why. b) Does it make sense to you that the discount rate is always above the federal funds rate in Figure 2? Explain why. Use a diagram to show your point if necessary. c) As shown in Figure 2, inflation has increased by a large margin since 2020 . Meanwhile, the federal funds rate had been close to zero for a large portion of 2020-2022. Do you see any connections between these two facts? If so, can you identify a possible causal link between the two? Explain as rigorously and concisely as possible. Based on the empirical patterns in Figure 3 below, answer the following questions. Figure 3: Interest Rates and Inflation, 2009-2022 a) Would you say the Federal Reserve System had been effective at maintaining a stable price level before 2020? Explain why. b) Does it make sense to you that the discount rate is always above the federal funds rate in Figure 2? Explain why. Use a diagram to show your point if necessary. c) As shown in Figure 2, inflation has increased by a large margin since 2020. Meanwhile, the federal funds rate had been close to zero for a large portion of 2020-2022. Do you see any connections between these two facts? If so, can you identify a possible causal link between the two? Explain as rigorously and concisely as possible