In the short run, a rise in the federal funds rate shifts the

Name: In the short run, a rise in the federal funds rate shifts the
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A rise in the federal funds rate increases the cost of borrowing for banks, which leads to a decrease in bank lending, causing a decrease in investment and consumption in the economy. This, in turn, leads to a decrease in aggregate demand (AD) and a leftward shift of the AD curve.

In the Short Run, a Rise in the Federal Funds