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Question 4 Go to the Fred or CANSIM database (or any other database) and download monthly data from January 1955 to December 2015 for the

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Question 4 Go to the Fred or CANSIM database (or any other database) and download monthly data from January 1955 to December 2015 for the three-month T-bill rate and the total consumer price index. a- What is the year-over-year inflation rate, using the formula Tit = 100( Pt - Pt_1) / Pt-1 (1) What is the average of yearly-inflation rate for the above period? b-What is the average T-bill rate? c-Assume that the expected inflation rate is the same as the actual average inflation rate (a restrictive assumption!) and calculate the average real interest rate, r.FRED ~ - 3-Month Treasury Bill: Secondary Market Rate 1.76 1.74 1.72 1.70 1.68 Percent 1.66 1.64 1.62 1.60 1.58 1.56 1.54 2002-05-13 2002-05-20 2002-05-27 2002-06-03 2002-06-10 2002-06-17 2002-06-24 2002-07-01 2002-07-08 2002-07-15 2002-07-22 2002-07-29 2002-08-05 2002-... 1960 2900 11 1 2010 Shaded areas indicate U.S. recessions Source: Board of Governors of the Federal Reserve System (US) fred.stlouisfed.org

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