Question

Hypothetically, the Federal Reserve is dropping rates up two or three times this year, probably at a quarter point per time. If you were the CFO of a medium-sized firm, how might that affect your decision to expand and build a new manufacturing plant?

paragraph answer please?

Answer 1

Answer - The world economy has been hit by the pandemic. In this phase , lot of efforts are being made by the government as well as the central bank. In order to boost the demand in the economy , the expansionary measures have to be opted so that money supply can be increased and more incentives are provided for expansion.

If the federal reserve is dropping the rates continuously , it aims to expand the money supply and improve the borrowing through cheaper interest rate. Hence as a CFO of business , the loans should be taken up , because they are available at cheaper interest rates. This is a good opportunity to expand the business at lower borrowing cost and increase operations to overcome negative impacts of pandemic.