If the Fed ____ the interest rates when inflationary expectations remain unchanged, the most likely result is that the value of dollar will ____ and the economy may ____.

Question

Quizplus · Accepted Answer

When the Federal Reserve increases interest rates, it typically leads to an appreciation of the dollar because higher rates offer investors higher returns on investments denominated in dollars. However, higher interest rates can also weaken the economy by making borrowing more expensive, which can reduce spending and investment.

If the Fed ____ the Interest Rates When Inflationary Expectations