Which of the following will increase interest rates in the short run?

Question

Quizplus · Accepted Answer

Open market sales by the Fed will decrease the money supply, leading to an increase in interest rates in the short run.

Note: Option A is incorrect because a decrease in reserve requirements will increase the money supply, leading to a decrease in interest rates. Option C and D are incorrect because a decrease in real GDP and a decrease in the price level may lead to a decrease in interest rates in the short run due to a decrease in the demand for credit.

Which of the Following Will Increase Interest Rates in the Short