- CFA Exams
- CFA Level I Exam
- Study Session 5. Economics (2)
- Reading 16. Monetary and Fiscal Policy
- Subject 4. The Objectives of Monetary Policy
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 |
|---|---|
| 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 |