The federal funds rate is the interest rate charged by banks when banks borrow “overnight” from each other.

The file titled The Fed contains the federal funds rates for the period 1955 through 2015 (source: “Effective federal funds rate,” Economic Research, Federal Reserve Bank of St. Louis, https://research.stlouisfed.

org, Mar. 7, 2016).

a. Produce a scatter plot of the federal funds rates for the period 1955 through 2015. Identify any timeseries components in the data.

b. Identify the recurrence period of the time series.

c. Fit a nonlinear trend model that uses coded years and coded years squared as predictors for the deseasonalized data.

d. Provide a forecast using the nonlinear trend model for 2016.