When the Fed Lowers the Federal Funds Rate, Aggregate Demand

question 42

Multiple Choice

When the Fed lowers the federal funds rate, aggregate demand

• A) increases.
• B) decreases.
• C) stays the same.
• D) could increase, decrease or stay the same.

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Definitions:

Oxidation

A chemical reaction involving the loss of electrons or an increase in oxidation state by a molecule, atom, or ion.

Substance

A form of matter that has a specific chemical composition and distinct physical properties.

Electrons

Subatomic particles with a negative charge, found orbiting the nucleus of an atom, involved in chemical bonds and electrical conductivity.

Enthalpy

A thermodynamic quantity equivalent to the total heat content of a system, representing the amount of energy needed to create a system plus the work needed to make room for it in its environment.