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The Figure Below Shows Inflation and the Federal Funds Rate

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The figure below shows inflation and the federal funds rate for the years 1970-1991. What policy rule does the Fed appear to be following during this period? Suppose the Fed adopts a different policy rule, to manage inflation expectations. Derive your own monetary policy rule that takes inflation expectations into consideration.Figure 13.6: Inflation and the Federal Funds Rate: 1970-1991 The figure below shows inflation and the federal funds rate for the years 1970-1991. What policy rule does the Fed appear to be following during this period? Suppose the Fed adopts a different policy rule, to manage inflation expectations. Derive your own monetary policy rule that takes inflation expectations into consideration.Figure 13.6: Inflation and the Federal Funds Rate: 1970-1991

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The Fed appears to be following the simp...

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