Using the FRED economic database (https://fred.stlouisfed.org/), graph the Effective Federal Funds rate from 2007 to the present. Now click Edit Graph and then Add Line. Add the Unemployment rate. Click Format and change the Y-axis position of line 2 (unemployment) to the right—this will give you one axis for the Federal Funds rate on the left and one axis for the Unemployment rate on the right.

a. How did the Fed respond to increasing unemployment?

b. Did monetary policy work to lower unemployment? Can you tell from this graph? 

c. What happens if unemployment spikes back up? Can the Fed lower the Federal Funds rate much more? Could the Fed push the Federal Funds rate below zero?