What is the intended effect of either lowering or raising the federal funds rate? 2. Explain the mechanism: what does the Fed actually DO (beyond making public pronouncements about their intentions) to lower or raise the federal funds rate from wherever it is? 3. What are the side effects, in the short run and the longer run, when the Fed does what you described in (2)? 4. We have recently had a major nationwide boom (a "bubble") in residential real estate and in the financial markets in general, which has come to an abrupt and painful end. Is there any connection between this bubble and its end, and Fed actions as shown in the graph you looked at in (1)?