The federal funds rate is the interest rate charged by banks when banks borrow “overnight” from each other. The funds rate fluctuates according to supply and demand and is not under the direct control of the Federal Reserve Board but is strongly influenced by the Fed’s actions. The file titled The Fed contains the federal funds rates for the period 1955–2008.
a. Construct a time-series plot for the federal funds rate for the period 1955–2008.
b. Describe the time-series components that are present in the data set.
c. Indicate the recurrence periods for any seasonal or cyclical components.