d and e please. just need graphs and couple sentences or bullet points IS relation:LM relation:Y = C(Y-T)+1(Y,in² + x) + Gi=īThe LM relation says the central bank controls the nominal interest rate, allowing the moneysupply to constantly adjust to money demand at the policy rate. In the IS relation,consumption is a function of disposable income; investment is a function of output, the realinterest rate and a risk premium (which reflects the probability of loan defaults).(a) Use the FRED database (https://fred.stlouisfed.org/) to discover what happened to thespread between risky corporate bonds and safe government bonds in the US at thestart of the COVID-19 pandemic. For example, search for the spread between Baacorporate bonds and 10-year Treasury bonds (BAA10Y). Draw a graph of this spreadand explain how this might be represented in the above model. Draw an IS-LMdiagram to explain the implications for output and interest rates to an increase in thisspread.(b) Use the FRED database (https://fred.stlouisfed.org/) to determine what happened tothe Federal Reserve's policy rate (called the Fed Funds rate) in response to this shock.Search for the Federal Funds Effective rate (FEDFUNDS). Draw a graph of thisseries. Use an IS-LM diagram to explain what the Federal Reserve hoped to achievewith this policy action.(c) Was the Fed's policy action successful in its initial aims? Justify your answer in termsof what happened to output, consumption and investment.(d) Use the FRED database (https://fred.stlouisfed.org/) to find out what happened toinflation. Search for the consumer price index (CPILFESL). Draw a graph ofinflation, not the CPI. Use an IS-LM-PC diagram to explain how central banks made asignificant policy error in 2021. (Hint: compare the length of time the financial shockyou explored in part (a) lasted relative to the monetary policy action. Alternatively,you could explore the length of time the labour market or commodity markets (e.g.,oil) were dislocated relative to policy actions.(e) What would you have done if you had been in charge of the Federal Reserve duringthis period?

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d and e please. just need graphs and couple sentences or bullet points

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

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Question

d and e please. just need graphs and couple sentences or bullet points

IS relation:
LM relation:
Y = C(Y-T)+1(Y,in² + x) + G
i=ī
The LM relation says the central bank controls the nominal interest rate, allowing the money
supply to constantly adjust to money demand at the policy rate. In the IS relation,
consumption is a function of disposable income; investment is a function of output, the real
interest rate and a risk premium (which reflects the probability of loan defaults).
(a) Use the FRED database (https://fred.stlouisfed.org/) to discover what happened to the
spread between risky corporate bonds and safe government bonds in the US at the
start of the COVID-19 pandemic. For example, search for the spread between Baa
corporate bonds and 10-year Treasury bonds (BAA10Y). Draw a graph of this spread
and explain how this might be represented in the above model. Draw an IS-LM
diagram to explain the implications for output and interest rates to an increase in this
spread.
(b) Use the FRED database (https://fred.stlouisfed.org/) to determine what happened to
the Federal Reserve's policy rate (called the Fed Funds rate) in response to this shock.
Search for the Federal Funds Effective rate (FEDFUNDS). Draw a graph of this
series. Use an IS-LM diagram to explain what the Federal Reserve hoped to achieve
with this policy action.
(c) Was the Fed's policy action successful in its initial aims? Justify your answer in terms
of what happened to output, consumption and investment.
(d) Use the FRED database (https://fred.stlouisfed.org/) to find out what happened to
inflation. Search for the consumer price index (CPILFESL). Draw a graph of
inflation, not the CPI. Use an IS-LM-PC diagram to explain how central banks made a
significant policy error in 2021. (Hint: compare the length of time the financial shock
you explored in part (a) lasted relative to the monetary policy action. Alternatively,
you could explore the length of time the labour market or commodity markets (e.g.,
oil) were dislocated relative to policy actions.
(e) What would you have done if you had been in charge of the Federal Reserve during
this period?

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