-In the above figure, if the economy is initially at point a, the short- run effect of a cut in the federal funds rate is given by movement from point

Question

Quizplus · Accepted Answer

A cut in the federal funds rate typically lowers interest rates, encouraging borrowing and spending, which increases output and decreases the unemployment rate, moving the economy from point a to point b.

-In the Above Figure, If the Economy Is Initially at Point