The Federal Reserve typically affects the real rate of interest in:
A) the short run only.
B) the long run only.
C) both the short run and the long run.
D) neither the short run nor the long run.

Question

Quizplus · Accepted Answer

The Federal Reserve primarily influences the real rate of interest in the short run through its monetary policy actions, such as setting the federal funds rate. In the long run, real interest rates are more influenced by factors like productivity and savings rates.

The Federal Reserve Typically Affects the Real Rate of Interest