Joe and Tess McGreen are purchasing their first home in Durham,North Carolina.They are seeking pre-qualification on a home loan.The unemployment rate for North Carolina is 10.2% and GDP is declining.Chances are pretty good that the Fed will raise interest rates in order to loosen the supply of money,resulting in a more expensive loan for Joe and Tess.
Level of Learning 3: Application of principles

Question

Quizplus · Accepted Answer

The Federal Reserve typically raises interest rates to tighten the money supply, not loosen it. Raising rates is usually done to combat inflation, not in response to high unemployment or declining GDP.

Joe and Tess McGreen Are Purchasing Their First Home in Durham,North