When the Fed raises interest rates, it expects

Name: When the Fed raises interest rates, it expects
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Question

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When the Fed raises interest rates, it increases the cost of borrowing for firms and consumers, leading to lower spending and investments. This results in a decrease in the growth rate of real GDP. However, it does not necessarily affect potential GDP, which is determined by the economy's structural factors such as labor force growth and technological progress.

When the Fed Raises Interest Rates, It Expects