In recessions, the short-term expected real interest rate usually
A)rises by about 4 percentage points.
B)rises by about 2 percentage points.
C)declines by about 2 percentage points.
D)declines by about 4 percentage points.

Question

Quizplus · Accepted Answer

During recessions, the Federal Reserve often cuts interest rates as a tool to boost economic growth. This leads to a decline in the short-term expected real interest rate by about 4 percentage points.

In Recessions, the Short-Term Expected Real Interest Rate Usually