If the Fed raises the interest rate, this will ________ inflation and ________ real GDP in the short run.
A. increase; lower
B. reduce; lower
C. increase; raise
D. reduce; raise
In the figure below, the money demand curve would move from Money demandi to Money demand2 ifInterestrate,MoneyMoneydemandzdemand,0Quantity of money, M(billions of dollars)O the Federal Reserve sold Treasury securities.O the price level decreased.O real GDP increased.O the interest rate increased.
