The decision of the Federal Reserve to reduce the short-term interest rate will shift the Security
Market Line upward.

Question

Quizplus · Accepted Answer

The decision of the Federal Reserve to reduce the short-term interest rate generally leads to lower required returns on investments, shifting the Security Market Line downward, as it becomes cheaper to borrow money, potentially increasing investment but reducing the cost of capital.

The Decision of the Federal Reserve to Reduce the Short-Term