In reaction to the terrorist attacks of September 11, 2001 the Federal Reserve moved to lower interest rates. This was intended to
A)increase aggregate demand.
B)increase aggregate supply.
C)decrease aggregate demand.
D)decrease aggregate supply.

Question

Quizplus · Accepted Answer

Lowering interest rates is a monetary policy tool used to increase the money supply and stimulate economic activity. By reducing borrowing costs, individuals and businesses are more likely to borrow and spend, which increases aggregate demand. After the 9/11 attacks, the Federal Reserve took this action in order to support the economy and prevent a recession.

In Reaction to the Terrorist Attacks of September 11, 2001