Effect on short-term and long-term interest rates
Question:
Suppose that the Fed unexpectedly increases the rate of money growth. Carefully explain the effect on short-term and long-term interest rates, and why those effects are different.
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Make an educated guess as to what you expect to happen to short-term interest rates and long-term interest rates during the next year.
Carefully explain the effect on short-term and long-term interest rates, and why those effects are different.
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