In the Short Run, When the Fed Increases the Federal

question 3

Multiple Choice

In the short run, when the Fed increases the federal funds rate,

• A)the real interest rate rises and investment decreases.
• B)the real interest rate falls and investment increases.
• C)there is no effect on investment because investment depends on the real interest rate.
• D)the real interest rate rises and investment does not change.
• E)the real interest rate is unaffected but investment still decreases.

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Definitions:

Men

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