Question

When the FED wants to stimulate the economy it raises short term rates to attract new investment and encourage savings

True

False

Answer 1

FALSE

When the FED wants to stimulate the economy it decreases short term rates to attract new investment and encourage savings

Lower interest rates encourage additional investment spending, which gives the economy a boost in times of slow economic growth.The Federal Reserve Board, also referred to as "the Fed," is in charge of setting interest rates for the United States through the use of monetary policy. The Fed adjusts interest rates to affect demand for goods and services. Interest rate fluctuations can have a large effect on the stock market, inflation, and the economy as a whole.Lowering interest rates is the Fed's most powerful tool to increase investment spending in the U.S. and to attempt to steer the country clear of recessions.