- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 12. Monetary and Fiscal Policy
- Subject 4. The Objectives of Monetary Policy
CFA Practice Question
If the Fed raises the discount rate, aggregate demand ______, real GDP growth ______, and the inflation rate ______.
Correct Answer: decreases; decreases, decreases
User Contributed Comments 2
| User | Comment |
|---|---|
| warnggg | Why does inflation rate fall? |
| cfastudypl | because when aggregate demand falls and real GDP growth decreases signalling contraction in the economy, inflation rate will fall. remember too that supply will be > than demand at this time. |