Which result is NOT expected when the Federal Reserve lowers its federal funds target rate?
A) increased investment
B) increased consumption of durable goods
C) decreased exports
D) decreased imports

Question

Quizplus · Accepted Answer

When the Federal Reserve lowers its federal funds target rate, it is expected to stimulate economic activity and growth by making borrowing cheaper. This leads to increased investment and consumption. However, it can also lead to a weaker currency, which makes exports more attractive, while imports become more expensive. Therefore, option C is unexpected as it suggests a decrease in exports, whereas the lower federal funds target rate typically leads to an increase in exports.

Which Result Is NOT Expected When the Federal Reserve Lowers