Suppose the Federal Reserve raises interest rates. Which statement predicts the most likely effect? (3 points) The money supply will decrease, meaning that banks will give fewer loans and prices for goods and services will fall. The money supply will decrease, meaning that people will buy more goods and services and prices will rise. The money supply will increase, meaning that people will want more loans and more businesses can open and hire workers. The money supply will increase, meaning that prices will rise and businesses will not hire many workers.

Respuesta :

If Federal Reserve would raise the interest rate, then the money supply will be decreased and bank will offer fewer loans only and prices will also fall.

What would happened if federal reserve would charged high interest rate?

The rise in the interest rate has the direct impact on the supply of the money. Higher the interest rate, lower the money supply and lower interest rate, increase the money supply.

Increase in the interest rate, will make the money more expensive as its supply would be decreased. High interest will discourage the people to not to take the loans.

The prices of goods and services will also fall.

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