"As the Fed Chases Inflation, Critics Shout, 'Faster!'" "For weeks, the Fed has broadcast its intention to raise interest rates glacially." The Fed was moving slowly, according to an economist because "...the declining price of oil, economic fundamentals, including productivity and global competition, will keep inflation in check." The Fed, recognizing that the economy was improving stated it planned to "respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability." Other economists disagree with the Fed's restrained policy as a "mistake."
Www)nytimes, 7/1/2004
The Fed's policy will ________ the quantity of money and ________ the supply of loanable funds.
A) decrease; decrease
B) increase; decrease
C) decrease; increase
D) increase; increase

Question

Quizplus · Accepted Answer

Raising interest rates typically leads to a decrease in the quantity of money and a decrease in the supply of loanable funds, as borrowing becomes more expensive.

"As the Fed Chases Inflation, Critics Shout, 'Faster!'" "For Weeks