Question

The Federal Reserve influences the long-run real interest rate LOADING... through? ____________. A. the discount rate....

The Federal Reserve influences the long-run real interest rate

LOADING...

through? ____________.

A.

the discount rate.

B.

the? short-term federal funds rate.

C.

adjustments to expected inflation.

D.

the? long-term federal funds rate.

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Answer #1

Solution:-Option B is correct.

B.the short-term federal funds rate.

Explaination:-The Federal Reserve influences the long-run real interest rate through the short-term federal funds rate.The real interest rate is determined by a number of underlying forces. Some of these are transitory and have relatively short-term influence on interest rates.In the United States, a key Federal Reservepolicy tool is the federal funds rate, the rate it charges banks for overnight loans.

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