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

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

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

Answer

Answer:

  • B. increased interest rates
  • C. decreased borrowing
  • E. decreased investing

Brief Explanations:

When the Federal Reserve decreases the money - supply, the supply of loanable funds in the market shrinks. This scarcity of money causes interest rates to rise. Higher interest rates make borrowing more expensive, so borrowing decreases. Also, with higher interest rates, the opportunity cost of investing increases, leading to decreased investing.