Because prices are slow to move in the short-run,when the Federal Reserve lowers the federal funds rate
A)nominal interest rates rise.
B)real interest rates fall.
C)inflation falls.
D)real interest rates rise.

Question

Quizplus · Accepted Answer

When the Federal Reserve lowers the federal funds rate, nominal interest rates tend to fall, but prices are slow to adjust in the short-run, resulting in a smaller decrease in the inflation rate. Thus, the real interest rates (adjusted for inflation) tend to fall.

Because Prices Are Slow to Move in the Short-Run,when the Federal