In an effort to address the troubled economy, ..."For the ninth time in just over a year, the Federal Re is expected to cut interest rates, quite possibly its last reduction in this downturn." Rates have not this low "... since 2003, when the economy was growing at a snail's pace. "
HYPERLINK "http://www.csmonitor.com/" www.csmonitor.com, 10/28/20
These rate cuts are designed to
A) increase bank reserves and the exchange rate.
B) increase the exchange rate and decrease government spending.
C) decrease the real long- term interest rate and increase real GDP.
D) decrease the exchange rate and investment.

Question

Quizplus · Accepted Answer

The rate cuts are designed to decrease the real long-term interest rate, which will encourage borrowing and investment, leading to an increase in real GDP. The other options are not directly related to the goals of the rate cuts.

In an Effort to Address the Troubled Economy