The Fed has decided to expand the money supply, leading to lower interest rates. As a small business owner, you react to these lower interest rates by deciding to expand your operations and open up a new branch of your pet grooming business. What impacts would this decision have on the macroeconomy?

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7 May, 01:33

The Fed has decided to expand the money supply, leading to lower interest rates. As a small business owner, you react to these lower interest rates by deciding to expand your operations and open up a new branch of your pet grooming business. What impacts would this decision have on the macroeconomy?

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Maddie · Answer 1

The Fed has decided to expand the money supply, leading to lower interest rates. As a small business owner, you react to these lower interest rates by deciding to expand your operations and open up a new branch of your pet grooming business. What impacts would this decision have on the macroeconomy? - This decision would lead to a raise in the GDP and a decrease in employment, and an increase in the investment part of the GDP.

Explanation:

The decision of The Fed to expand the money supply will lead to a decrease in both money supply and interest rates; people will increase the investment. This expands the business, thus resulting in hiring the people. This would eventually lead to a raise in the GDP and a decrease in employment, and an increase in the investment part of the GDP.