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blsea [12.9K]
3 years ago
8

If the Federal Reserve announces that its target for the federal funds rate is rising from 4 percent to 4.25 percent, how do you

expect workers and firms to react?
a.) As long as the Fed's announcement is credible, workers and firms will increase their consumption and investment spending, which will increase aggregate demand and inflation.
b.) As long as the Fed's announcement is credible, workers and firms will reduce their consumption and investment spending, which will reduce aggregate demand and reduce inflation.
c.) If the Fed's announcement is not credible, workers and firms will not expect inflation to fall so they will reduce their consumption and investment spending, which will increase aggregate demand and reduce inflation.
d.) Workers and firms will incorporate the increase in interest rates into their expectations of inflation, and they will expect inflation to rise as a result of Fed's policy announcement.
Business
1 answer:
olganol [36]3 years ago
6 0

Answer:

B) As long as the Fed's announcement is credible, workers and firms will reduce their consumption and investment spending, which will reduce aggregate demand and reduce inflation.

Explanation:

If the FED announces that it will increase the federal funds rate, it will increase the interest that banks charge other banks for lending them money in order to  comply with the reserve ratio. This increase would make banks hand out less loans and be more careful in order to reduce their need for overnight funds.

If banks reduce their loans, their capacity for creating money will also be reduced, lowering the consumption level and investment spending of both workers (households) and private firms.

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2 years ago
Obenve one urgent social problem in your Community & conceptualise cocial Enterprise that can can solve the problem and make
atroni [7]

Correct question is-

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1 year ago
Which statement reports the changes in shareholders' equity during the period that were not a result of transactions by owners.
guajiro [1.7K]

Answer:

the statement of comprehensive income

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3 years ago
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yanalaym [24]

Answer:

$1,482 unfavorable

Explanation:

Calculation to determine the variable overhead flexible-budget variance

Using this formula

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Let plug in the formula

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