When the Fed worries about inflation,it ________ the federal funds rate and,in the short run,________ the real interest rate.
A)lowers;lowers
B)lowers;raises
C)raises;lowers
D)raises;raises
E)does not change;the Fed raises

Question

Quizplus · Accepted Answer

When the Fed is concerned about inflation, it raises the federal funds rate to make borrowing more expensive, which in turn raises the real interest rate in the short run.

When the Fed Worries About Inflation,it ________ the Federal Funds