In general, if the Fed increases its target for the federal funds rate,
A) short-term nominal interest rates will increase and long-term nominal interest rates will not change.
B) short-term nominal interest rates will not change and long-term nominal interest rates increase.
C) short-term nominal interest rates will increase and long-term nominal interest rates will also increase.
D) short-term nominal interest rates will not change and long-term nominal interest rates will also not change.
Question 2
If the government cuts taxes ________.
A) disposable income falls
B) planned expenditures rise
C) the IS curve shifts to the left
D) all of the above
E) none of the above
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