If the Fed raises the interest rate, the first effect in an AS/AD figure is a ________ shift of the ________ curve.

Question

Quizplus · Accepted Answer

When the Fed raises the interest rate, it becomes more expensive to borrow money, which typically reduces spending and investment. This decrease in spending causes the Aggregate Demand (AD) curve to shift leftward, indicating a decrease in the overall demand for goods and services in the economy.

If the Fed Raises the Interest Rate, the First Effect