When the Federal Reserve loosens money, the money ________ and interest rates ________.

Question

Quizplus · Accepted Answer

When the Federal Reserve loosens money, this means that they are increasing the money supply in the economy. By doing this, the supply curve for money shifts to the right. With a higher supply of money in the economy, interest rates typically fall as banks are willing and able to lend money at a lower rate. Therefore, the correct answer is B - supply curve shifts right; fall.

When the Federal Reserve Loosens Money, the Money ________ and Interest