If every one-point change in the federal funds rate alters aggregate demand by $200 billion, how far did AD shift in response to the interest rate cuts?

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11-06-2022
Physics

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If every one-point change in the federal funds rate alters aggregate demand by $200 billion, how far did AD shift in response to the interest rate cuts?

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okpalawalter8 okpalawalter8 · Answer 1 · 2022-06-22T17:58:51+02:00

If every one-point change in the federal funds rate alters aggregate demand by $200 billion, the AD shifted to the right by a billion. This is further explained below.

What is the interest rate?

Generally, the interest rate is simply defined as the part of a loan levied to the borrower as interest, usually represented as a yearly percentage of the loan outstanding

In conclusion, If a one-point increase in the federal funds rate changes aggregates demand by $200 billion, the AD shifts to the right by a billion.