The Federal Reserve has responded by increasing the federal fund rate in high inflation and by decreasing the same rate in the higher unemployment situation during the span of forty years.
Inflation is the situation where the price of goods and services have been increased significantly and reduces the purchasing power of people.
The federal rate of funds enhances in the scenario of high inflation whereas the federal funds rate tends to decrease in the scenario of higher unemployment by the Federal Reserve in the economy of the US country.
Therefore, the federal fund rate rises in inflation and falls in unemployment as applied by the Federal Reserve.
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