If the Fed is concerned about a possible recession,it ________ the federal funds rate and,in response,long-term interest rates ________ by a ________ amount than the change in short-term rates.
A)raises;increase;larger
B)lowers;increase;smaller
C)raises;decrease;larger
D)lowers;decrease;smaller
E)raises;increase;smaller

Question

Quizplus · Accepted Answer

If the Fed is concerned about a recession, it typically lowers the federal funds rate to stimulate economic activity. In response, long-term interest rates also decrease, but usually by a smaller amount than the change in short-term rates due to factors like expectations and risk premiums.

If the Fed Is Concerned About a Possible Recession,it ________