Changes in the Federal Funds Rate Usually Result in

question 143

Multiple Choice

Changes in the federal funds rate usually result in

• A)changes in both short-term and long-term interest rates with more of an effect on short-term interest rates.
• B)changes in both short-term and long-term interest rates with more of an effect on long-term interest rates.
• C)changes in both short-term and long-term interest rates with equal effect on both.
• D)no change in both short-term and long-term interest rates.

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Definitions:

Bowed Inward

A description often used in economics to illustrate a production possibility frontier that indicates increasing opportunity costs for producing goods.

Budget Constraint

The limit on the consumption bundles that a consumer can afford to purchase based on their income and the prices of goods and services.

Goods X

A placeholder term typically used in economic models to represent a generic good or product.

Marginal Rate

This refers to the rate at which one variable changes with respect to a change in another variable, commonly used in economics and finance to describe rates of substitution and transformation.