Chapter 25, Problem 1DAP

To determine

1. The time when the last rate cycle began and ended and to find out whether the rate cycle was contradictory or an expansion rate cycle
2. The percentage change in business fixed investment, investment and consumer durable expenditure over this rate cycle
3. To justify the effectiveness of traditional interest rate channel of monetary policy on the basis of the answers of part (a) and (b) over this rate cycle.

Concept introduction:

Rate cycle: A rate cycle is define as a period of monetary policy through which the federal fund rate moves from its high point to its low point or vice versa, in response to business cycle conditions.