When the Fed lowers the federal funds rate, aggregate demand

Name: When the Fed lowers the federal funds rate, aggregate demand
Brand: Quizplus
Rating: 4.9 (50 reviews)

Question

Quizplus · Accepted Answer

When the Fed lowers the federal funds rate, it becomes more affordable for banks to borrow money from each other, and, in turn, they can lend more money to individuals and businesses. This increase in available credit leads to an increase in spending, which increases aggregate demand. Therefore, aggregate demand increases when the Fed lowers the federal funds rate.

When the Fed Lowers the Federal Funds Rate, Aggregate Demand