Question

The Federal Reserve will increase interest rates to:

a. give higher returns to those who invest in the stock market.

b. slow down the rate of inflation (economy).

c. speed up the economy.

d. All of these selections are correct

e. None of these selections are correct

Answer 1

The Federal Reserve will increase interest rates to:

a. give higher returns to those who invest in the stock market. INCORRECT Fed rate increase doesn't directly impact the Stock Market Returns, as the rate change is something related to the threshold of liquidity with the local banking system.

b. slow down the rate of inflation (economy). CORRECT Fed Reserve increase interest rates generally when the inflation is going at the unmatched increase and when there is a need to put check on the inflation to avoid demand - supply mismatch resulting in an imbalance economy.

c. speed up the economy. INCORRECT Fed rate increase slow down the inflation and this slows down the economy to balance the demand - supply situation.

d. All of these selections are correct

e. None of these selections are correct