-In the above figure,suppose point C is the original equilibrium.If the Fed hikes the federal funds rate,the new equilibrium is given by point

Question

Quizplus · Accepted Answer

When the Fed hikes the federal funds rate, it typically leads to a decrease in the money supply, causing interest rates to rise. This results in a movement along the demand curve for money, leading to a new equilibrium at a higher interest rate and lower quantity of money, which is represented by point A.

-In the Above Figure,suppose Point C Is the Original Equilibrium