If every one-point change in the federal funds rate alters aggregate demand by $200 billion, how far did AD shift in response to

Question

ASHA 777 [7]

1 year ago

11

If every one-point change in the federal funds rate alters aggregate demand by $200 billion, how far did AD shift in response to

the interest rate cuts?

Physics

1 answer:

attashe74 [19] · Answer 1 · 2023-06-07T12:23:20+03:00

If every one-point change in the federal funds rate alters aggregate demand by $200 billion, the AD shifted to the right by a billion. This is further explained below.

<h3>What is the interest rate?</h3>

Generally, the interest rate is simply defined as the part of a loan levied to the borrower as interest, usually represented as a yearly percentage of the loan outstanding

In conclusion, If a one-point increase in the federal funds rate changes aggregates demand by $200 billion, the AD shifts to the right by a billion.