Unemployment and Federal Funds Rate

This activity focuses on unemployment and the federal funds rate. Follow the steps below to create a FRED® graph and answer the questions that follow.

1. Go to https://fred.stlouisfed.org/.

2. Search for “Unemployment Rate” by copying and pasting this series ID: UNRATE into the Search box. The gray bars in the graph represent recessions.

3. Look at the upper right of the screen for an orange button that says EDIT GRAPH. Click it and make sure the ADD LINE tab is highlighted. In the search bar, type in “Effective Federal Funds Rate” or use this series ID: EFFR. Click on this, and then click the Add data series button.

4. Use the date boxes above the graph to change the start date to “2000-01-01.”

5. Make sure that the label on your vertical axis is Percent.

6. Click on “Share Links” on the bottom left of your graph and select “Image Short URL.” Copy the URL that appears in the pop-up window and paste it in your response to the discussion board activity.

Answer these questions:

What is the URL for the graph you created?

Define each variable – the unemployment rate and the federal funds rate. As part of your answer, indicate which one is a tool used by the Fed to conduct monetary policy.

Use your graph to answer the questions below about these two variables.

Unemployment Rate – What happens before a recession? What happens during a recession? What happens after a recession? What happened during 2020?
Effective Federal Funds Rate – What happens before a recession? What happens during a recession? What happens after a recession? What happened during 2020?