A rise in the federal funds rate a. raises the long-term real interest rate. b. does not change the long-term real interest rate. c. lowers the long-term real interest rate. d. may raise or lower the long-term real interest rate, depending on whether the demand for loanable funds curve has a negative or a positive slope.
A rise in the federal funds rate a. raises the long-term real interest rate. b. does not change the long-term real interest rate. c. lowers the long-term real interest rate. d. may raise or lower the long-term real interest rate, depending on whether the demand for loanable funds curve has a negative or a positive slope.
Chapter21: Financial Markets, Saving, And Investment
Section: Chapter Questions
Problem 9P
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A rise in the federal funds rate
a. raises the long-term real interest rate.
b. does not change the long-term real interest rate.
c. lowers the long-term real interest rate.
d. may raise or lower the long-term real interest rate, depending on whether the demand for loanable funds curve has a negative or a positive slope.
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