An increase in the federal funds rate would

Question

Quizplus · Accepted Answer

An increase in the federal funds rate usually leads to a decrease in the availability of credit. This is because when the federal funds rate increases, it becomes more expensive for banks to borrow from the Federal Reserve, and they are likely to pass on this increased cost to borrowers by raising interest rates on loans. Higher interest rates on loans can discourage people and businesses from borrowing and spending, which can lead to a decrease in the availability of credit.

An Increase in the Federal Funds Rate Would