If the Fed lowers the federal funds rate,which of the following will NOT happen?
A)The real interest rate falls.
B)Other short-term interest rates fall.
C)Aggregate demand increases.
D)Real GDP increases.
E)The price level falls.

Question

Quizplus · Accepted Answer

Lowering the federal funds rate may lead to a lower real interest rate (A), lower short-term interest rates (B), increased aggregate demand (C), and higher real GDP (D) due to increased borrowing and investment. However, it is unlikely to lead to a fall in the price level (E), as lower interest rates tend to stimulate demand and economic activity, potentially increasing inflationary pressures.

If the Fed Lowers the Federal Funds Rate,which of the Following