if the federal reserve decreased the money supply, what would the effects be? check all that apply…

if the federal reserve decreased the money supply, what would the effects be? check all that apply. decreased interest rates increased interest rates decreased borrowing increased borrowing decreased investing increased investing

if the federal reserve decreased the money supply, what would the effects be? check all that apply. decreased interest rates increased interest rates decreased borrowing increased borrowing decreased investing increased investing

Answer

Brief Explanations:

When the Federal Reserve decreases the money - supply, the supply of loanable funds in the market shrinks. With less money available for lending, interest rates rise (due to the law of supply and demand for money). Higher interest rates make borrowing more expensive, so borrowing decreases. Since borrowing is often used for investment, decreased borrowing leads to decreased investing.

Answer:

increased interest rates, decreased borrowing, decreased investing