If the economy weakens, there is ____ pressure on interest rates. If the Federal Reserve increases the money supply there is ____ pressure on interest rates (assume that inflationary expectations are not affected).
A)upward; upward
B)upward; downward
C)downward; upward
D)downward; downward

Question

If the economy weakens, there is ____ pressure on interest rates. If the Federal Reserve increases the money supply there is ____ pressure on interest rates (assume that inflationary expectations are not affected). ​
A)upward; upward
B)upward; downward
C)downward; upward
D)downward; downward

Quizplus · Accepted Answer

When the economy weakens, there is typically downward pressure on interest rates as the central bank may lower rates to stimulate economic activity. Similarly, if the Federal Reserve increases the money supply, it generally leads to lower interest rates as more money is available for lending.

If the Economy Weakens, There Is ____ Pressure on Interest