When there is a threat of inflation in the economy, the Fed can ________ the federal funds rate so to ________ aggregate demand and ________ the price level.

Name: When there is a threat of inflation in the economy, the Fed can ________ the federal funds rate so to ________ aggregate demand and ________ the price level.
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Question

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Raising the federal funds rate makes borrowing more expensive, which decreases aggregate demand and helps to lower the price level, combating inflation.

When There Is a Threat of Inflation in the Economy