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Author Question: How does a rise in the federal funds rate affect aggregate demand, real GDP, and the price level? ... (Read 94 times)

gonzo233

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on: Jun 29, 2018
How does a rise in the federal funds rate affect aggregate demand, real GDP, and the price level?
 
  What will be an ideal response?

Question 2

The tendency for the values of two variables to move in a predictable and related way is known as
 
  A) a natural experiment.
  B) a normative relationshi


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potomatos

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Reply #1 on: Jun 29, 2018
Answer to Question 1

A rise in the federal funds leads to investment, consumption expenditure, and net exports all decreasing, which, in turn, decreases aggregate demand. The decrease in aggregate demand then decreases real GDP and lowers the price level.

Answer to Question 2

D


gonzo233

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Reply 2 on: Jun 29, 2018
Wow, this really help

bigsis44

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

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