Using the diagram below, show the period of when the Fed did poorly on the forward guidance. Then show on the diagram the period when the forward guidance worked and how do we know it worked - use the diagram in conjunction the interpretation of the vertical axis on the diagram. What does the vertical axis on the diagram represent and what is the ideal value if the Fed is pursing maximum bite with their forward guidance? Again, refer to your expression for the 3 year interest rate as we did in class.

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