The FOMC is concerned about inflation and has ________ the federal funds rate.Due to substitution effects,other ________ interest rates will ________ almost immediately.
A)increased;short-term;increase
B)decreased;long-term;decrease
C)increased;long-term;increase
D)increased;short-term;decrease
E)decreased;short-term;decrease

Question

Quizplus · Accepted Answer

The FOMC increases the federal funds rate when they are concerned about inflation. Short-term interest rates will also increase almost immediately due to the substitution effect. So, option A is correct.

The FOMC Is Concerned About Inflation and Has ________ the Federal