If the fed raises the interest rate, this will ________ inflation and ________ real gdp in the short run.
a. increase; raise
b. reduce; raise
c. increase; lower
d. reduce; lower
When the Fed raises interest rates it will reduce inflation and lower the GDP in the short term. GDP stands for Gross Domestic Product. The Feds sometimes take this action in an effort to jump start a slow or stagnant economy.
