Which of the Following Changes Is Observed When the Fed

question 122

Multiple Choice

Which of the following changes is observed when the Fed increases the federal funds rate?

• A)Inflation is brought to an immediate halt.
• B)The inflation rate increases for several months,but then begins to decrease.
• C)Major banks try to offset this change by lowering the interest rates they charge on loans.
• D)Major banks try to offset this change by lowering the interest rates they pay on savings deposits.
• E)Major banks raise the prime interest rate that they charge to their best customers.

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