Interest rates should decease if A) The economy is in a boom. B) Inflationary expectations have decreased. C) The Federal Reserve has decreased M₁ and the supply of loanable funds. D) Business investment demand has decreased significantly.

Question

Quizplus · Accepted Answer

Interest rates should decrease if inflationary expectations have decreased because lower inflation expectations reduce the need for higher interest rates to control inflation.

Interest Rates Should Decease If