Which of the following is likely in response to the policy initiative described in the In the News article titled "U.S.Federal Reserve Cuts Interest Rates to Historic Low"?

Question

Quizplus · Accepted Answer

When the Federal Reserve cuts interest rates, it becomes cheaper for banks to borrow money. This in turn makes it easier for banks to lend money to consumers and businesses, which can stimulate economic activity and growth. Therefore, it is likely that bank lending will increase in response to this policy initiative. Option A is unlikely as a low interest rate usually strengthens the economy and creates jobs. Option B is also unlikely as the long-term effects of interest rate cuts are usually inflationary. Option D is incorrect as lowering interest rates typically encourages borrowing, which is beneficial to industries such as mortgages and real estate.

Which of the Following Is Likely in Response to the Policy