According to the theory of rational expectations, if the Fed uses open market operations to increase the supply of loanable funds, the ultimate effect on interest rates
A) is a reduction in interest rates.
B) is an increase in interest rates.
C) is no effect on interest rates.
D) cannot be determined.

Question

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The Answer of According to the theory of rational expectations, if the Fed uses open market operations to increase the supply of loanable funds, the ultimate effect on interest rates
A) is a reduction in interest rates.
B) is an increase in interest rates.
C) is no effect on interest rates.
D) cannot be determined.

According to the Theory of Rational Expectations, If the Fed