When the Fed lowers the federal funds rate ________. A. ...

[PhilipSeeMore]

When the Fed lowers the federal funds rate ________.
 
  A. aggregate demand increases the same day
  B. investment increases, but only after the economy's growth rate rises
  C. the quantity of money and loans increase in the short term
  D. the inflation rate increases about two years later

Question 2

Arguments by regulators are often made that predatory pricing, with its attendant temporary price-cutting below costs, is an attempt to eliminate rivals with the intent of raising prices after the competition has left.
 
  Critically evaluate this argument.

[JYan]

Answer to Question 1

D Although few of the impacts of the Fed's policy actions occur immediately, the impact on the inflation rate is particularly delayed.

Answer to Question 2

First of all price cutting below costs will not only exact losses on the competition but also on the firm that practices this strategy. Second, even if the firm is successful in eliminating its rivals and raises prices after their departure that is no guarantee that new arrivals will be kept at bay especially when the remaining firms in the industry resume earning economic profit.

[PhilipSeeMore]

Thank you

[JYan]

Happy to help you