List the sequence of events in the transmission from a rise in the federal funds rate to a change in the inflation rate. When the Fed raises the federal funds rate, other short-term interest rates and the exchange rate _______. A. rise the same day or the next day, but it takes a few weeks through a few months for the quantity of money and supply of loanable funds to decrease B. rise within a few weeks or months but the long-run interest rate rises almost immediately C. and the long-term interest rate rise the same day or the next day, but it takes a few weeks for consumption expenditure and investment to decrease D. rise the same day or the next day, but it takes a few weeks through a few months for the quantity of money and supply of loanable funds to increase When the Fed raises the federal funds rate, consumption expenditure, investment, and net exports _______ and aggregate demand _______. A. decrease when the quantity of money and supply of loanable funds decrease; decreases up to a year later B. increase up to a year later; increases up to a year later C. decrease about two years later; decreases about two years later D. decrease up to a year later; decreases up to a year later When the Fed raises the federal funds rate real GDP growth _______ and the inflation rate _______. A. decreases within a month; decreases within a month B. does not change; decreases about two years later C. decreases about a year later; decreases about two years later D. increases about a year later; increases about two years later
List the sequence of events in the transmission from a rise in the federal funds rate to a change in the inflation rate. When the Fed raises the federal funds rate, other short-term interest rates and the exchange rate _______. A. rise the same day or the next day, but it takes a few weeks through a few months for the quantity of money and supply of loanable funds to decrease B. rise within a few weeks or months but the long-run interest rate rises almost immediately C. and the long-term interest rate rise the same day or the next day, but it takes a few weeks for consumption expenditure and investment to decrease D. rise the same day or the next day, but it takes a few weeks through a few months for the quantity of money and supply of loanable funds to increase When the Fed raises the federal funds rate, consumption expenditure, investment, and net exports _______ and aggregate demand _______. A. decrease when the quantity of money and supply of loanable funds decrease; decreases up to a year later B. increase up to a year later; increases up to a year later C. decrease about two years later; decreases about two years later D. decrease up to a year later; decreases up to a year later When the Fed raises the federal funds rate real GDP growth _______ and the inflation rate _______. A. decreases within a month; decreases within a month B. does not change; decreases about two years later C. decreases about a year later; decreases about two years later D. increases about a year later; increases about two years later
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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List the sequence of events in the transmission from a rise in the federal funds rate to a change in the inflation rate.
When the Fed raises the federal funds rate, other short-term interest rates and the exchange rate _______.
rise the same day or the next day, but it takes a few weeks through a few months for the quantity of money and supply of loanable funds to decrease
rise within a few weeks or months but the long-run interest rate rises almost immediately
and the long-term interest rate rise the same day or the next day, but it takes a few weeks for consumption expenditure and investment to decrease
rise the same day or the next day, but it takes a few weeks through a few months for the quantity of money and supply of loanable funds to increase
When the Fed raises the federal funds rate, consumption expenditure, investment, and net exports _______ and aggregate demand _______.
decrease when the quantity of money and supply of loanable funds decrease; decreases up to a year later
increase up to a year later; increases up to a year later
decrease about two years later; decreases about two years later
decrease up to a year later; decreases up to a year later
When the Fed raises the federal funds rate real GDP growth _______ and the inflation rate _______.
decreases within a month; decreases within a month
does not change; decreases about two years later
decreases about a year later; decreases about two years later
increases about a year later; increases about two years later
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