When the Fed worries about inflation, it_{--------------------} the federal funds rate and, in the short run, _{--------------------}the real interest rate. A)raises; raises B)does not change; the Fed raises C)raises; lowers D)lowers; raises E)lowers; lowers

Question

Quizplus · Accepted Answer

When the Fed is concerned about inflation, it typically raises the federal funds rate to make borrowing more expensive, which in turn raises the real interest rate in the short run to help control inflation.

When the Fed Worries About Inflation, It-------------------- the Federal Funds

When the Fed Worries About Inflation, It_{--------------------} the Federal Funds