Answer: Because is cheap
2 Because is better and you save money
Explanation:
When the current output is more than the potential output the fed is likely to enact decreasing reserves to increase interest rates.
The reason why they would have to do this is based on the fact that when the actual output in the economy is more than the potential output, It means that there is an inflationary gap.
In order to close this gap, the fed would have to reduce the aggregate demand, thereby raising the rate of interest. This would in turn lead to the fall in consumption and fall in saving.
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Answer:
A) Demand would increase
Explanation:
Interest rates and demand are inversely related, that is to say, if interest rates rise, demand decreases, and if interest rates go down, demand goes up.
The reason for this is that a lower interest rate means that loans are cheaper. As loans are cheaper, investments increase, and more investment means more aggregate demand because investment is one of its components.
Manager? I’m not sure but that’s my best guess. Hope it helps :)