Please do as the following instruction exactly.IntroductionIn the first interest rates case, you developed some ideas as to why interest rates may change. You may have had some difficulty doing this since you were essentially working without much preparation. Now you have finished covering the Loanable Funds model, which is a tool for analyzing changes in interest rates. In this case you will obtain a chart of US Treasury bond interest rates and use the Loanable Funds model to explain observed changes in the rates over time.InstructionsGo the web site for the National Bureau of Economic Research http://www.nber.org. Among other things, this organization identifies dates for past economic expansions and recessions. On the NBER’s home page, on the left, click on Data then click on Business Cycle Dates. The resulting table gives dates for business cycles. The first column indicates dates for “Peaks”, or the date when a recession began. The second column indicates dates for “Troughs”, or the date when an economic expansion started. For example, scroll down to the Trough date of May, 1954. That date was the beginning of an expansion, which ended on the Peak date of August, 1957. This began a recession, which lasted until the next Trough date of April, 1958.Print the page containing the business cycle dates. You will print more than you need, so you can discard everything other than the business cycle dates. Include the dates with your report.Now, go to the Economagic web site http://www.economagic.com. Scroll down and under Federal Reserve, Board of Governors click Interest Rates. Scroll down and click on the 5-Year Treasury Constant Maturity link. The monthly series for 5 year Treasury Bond yields will be listed, with the earliest value being April, 1953.Click on GIF Chart in the black area under the second green title bar. You should see a chart for the last 10 years or so of the T Bond yields. Scroll down to the date boxes. In the box for Starting year, enter the earliest indicated year (it should be 1953). Leave the Ending year as it is. Click the button that says Show Recessions. Scroll down and click on the Make Chart button. Right click on the chart and click Print Picture. (If you have a graphics viewer, you can save it to your disk and print it later.) You will need to include the chart with your report. Verify that the recession dates you have from NBER correspond to those on the chart.ObservationsThe chart you have is similar to the one you developed in the first case for this chapter, except that it’s for a longer period of time. Notice that there are some general statements that can be made about the movements that have occurred in interest rates over time:1. Over relatively short periods of time, interest rates seem to move in cycles. These cycles happen to correspond to economic business cycles. For example there was a drop in interest rates in 1958. This corresponded to a recession that occurred during that year. The rates then increased until 1960, another recession year, when they went down. In virtually every recession, interest rates decreased and then they increased in expansionary periods. Verify this by referring to the business cycle dates you obtained from the NBER web site.2. Over longer periods of time, interest rates followed trends. From the early 1950’s to the early 1980’s interest rates trended or drifted upward. From the early 1980’s on, they trended or drifted downward.QuestionsWrite a report in which you use the Loanable Funds model to explain the movements identified in each observation noted above. You must identify specific factors included in the model that affect either the “Supply of Loanable Funds” (SLF) or the “Demand for Loanable Funds” (DLF), or both, that would account for the cyclical movement in interest rates over business cycles. Then do the same to explain the upward then downward trends that occurred over long periods. To illustrate your answers, you can draw graphs of the SLF and DLF and how they changed to cause the different movements in interest rates identified in the observations.
Last Completed Projects
| topic title | academic level | Writer | delivered |
|---|