Suppose the Federal Reserve desires to raise the level of planned investment in the economy.It either has to hope that an improvement in business confidence shifts the rate-of-return line to the ________ ,or it has to take direct action by ________ the interest rate.

Question

Quizplus · Accepted Answer

To raise the level of planned investment, the Federal Reserve would want to lower the interest rate, making borrowing cheaper for businesses, which in turn could improve investment levels. An improvement in business confidence would shift the rate-of-return line to the right, indicating higher returns on investment at any given interest rate.

Suppose the Federal Reserve Desires to Raise the Level of Planned