Corporate bond interest rates are a good measure of the interest rate facing firms planning investments. Before the financial crisis, this rate was about 2% higher than the fed funds rate. At the peak of the crisis in October 2008, the Baa rated bond rate was almost 9 percent higher than the fed funds rate. A) Go to the FRED database and look up the series BAA10Y and extend the data range to "max". Compare what you see to the TED spread TEDRATE for the same range. Find the definitions for each of these interest rate spreads. Why do you think these two measures are often used to discuss financial conditions in the macroeconomy?
B) Suppose the economy begins in steady state, and there is a shock to the interest spread f. Use the IS- MP and AS/AD diagrams to show and explain how the economy reacts if the Fed follows the simple monetary rule does not change its inflation target.
C) Continuing from part b), explain how the economy adjusts back towards the steady state when the shock to f lasts for one period.

In december of 2004, the company you own entered into a 20-year contract with a grain supplier for daily deliveries of grain to its hot dog bun manufacturing facility. the contract called for "10,000 pounds of grain" to be delivered to the facility at the price of $100,000 per day. until february 2017, the supplier provided processed grain which could easily be used in your manufacturing process. however, no longer wanting to absorb the cost of having the grain processed, the supplier began delivering whole grain. the supplier is arguing that the contract does not specify the type of grain that would be supplied and that it has not breached the contract. your company is arguing that the supplier has an onsite processing plant and processed grain was implicit to the terms of the contract. over the remaining term of the contract, reshipping and having the grain processed would cost your company approximately $10,000,000, opposed to a cost of around $1,000,000 to the supplier. after speaking with in-house counsel, it was estimated that litigation would cost the company several million dollars and last for years. weighing the costs of litigation, along with possible ambiguity in the contract, what are three options you could take to resolve the dispute? which would be the best option for your business and why?