- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 4. Monetary Policy
- Subject 2. Monetary Policy Tools and Monetary Transmission
CFA Practice Question
When the Federal Reserve lowers the federal funds rate, the quantity of money ______ and the supply of loanable funds ______.
A. decreases; increases
B. increases; decreases
C. increases; increases
User Contributed Comments 1
User | Comment |
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renataa | Why supply of loanable funds increases? If the interest rates are low, why banks would want to lend more if they make less out of the interest payments? I understand that demand for loans will increase but not the supply.. I am missing something here |