When the Fed raises interest rates they are attempting to:
A) Increase aggregate demand.
B) Decrease aggregate demand.
C) Increase aggregate supply.
D) Decrease aggregate supply.

Question

Quizplus · Accepted Answer

When the Fed raises interest rates, it becomes more expensive for individuals and businesses to borrow money. As a result, they are more likely to save their money rather than spend it, which decreases overall aggregate demand.

When the Fed Raises Interest Rates They Are Attempting To