If There Are No Changes in Inflation Expectations,a Fall in the Federal

question 86

Multiple Choice

If there are no changes in inflation expectations,a fall in the federal funds rate ________.

• A) decreases the long-term nominal interest rate and increases the long-term expected interest rate
• B) increases the long-term nominal interest rate and decreases the long-term expected interest rate
• C) decreases both the long-term nominal interest rate and the long-term expected interest rate
• D) increases both the long-term nominal interest rate and the long-term expected interest rate