Which of the following will increase interest rates in the short run?
A)an decrease in reserve requirements
B)open market sales by the Fed
C)a decrease in real GDP
D)an decrease in the price level

Question

Which of the following will increase interest rates in the short run?
A)an decrease in reserve requirements 
B)open market sales by the Fed 
C)a decrease in real GDP 
D)an decrease in the price level

Quizplus · Accepted Answer

Open market sales by the Fed will decrease the money supply, leading to an increase in interest rates in the short run.

Note: Option A is incorrect because a decrease in reserve requirements will increase the money supply, leading to a decrease in interest rates. Option C and D are incorrect because a decrease in real GDP and a decrease in the price level may lead to a decrease in interest rates in the short run due to a decrease in the demand for credit.

Which of the Following Will Increase Interest Rates in the Short