Heidi May

Law

1 May, 11:21

Suppose the Federal Reserve decides to increase the money supply. Which statement predicts the most likely effect?

A) Interest rates will rise, meaning that banks will give fewer loans and prices for goods and services will fall.

B) Interest rates will fall, meaning that banks will give more loans and more businesses can open and hire workers.

C) Interest rates will fall, meaning that prices will rise and businesses will not hire many workers.

D) Interest rates will rise, meaning that people will want to get more loans and prices will rise.