If the Fed lowers the federal funds rate,eventually the
A)AD curve shifts leftward,decreasing real GDP and raising the price level.
B)AS curve shifts leftward,decreasing real GDP and raising the price level.
C)AD curve shifts rightward,increasing real GDP and raising the price level.
D)AD curve shifts leftward,decreasing real GDP and lowering the price level.
E)AS curve shifts rightward,decreasing real GDP and raising the price level.

Question

Quizplus · Accepted Answer

Lowering the federal funds rate makes it easier for banks to lend money, which increases the money supply and lowers interest rates. This stimulates investment and consumption, leading to an increase in aggregate demand, shifting the AD curve rightward, increasing real GDP, and raising the price level.

If the Fed Lowers the Federal Funds Rate,eventually the