Interest rates levels An interesting outlook on interest rates was made by the Federal Reserve. Open the WSJ article: INTEREST RATES.rtf After reading the article, one page in the module and sections 6-1,6-2 and 6-3 of the text, answer the following questions:
1. How does risk affect interest rate?
2. Stock market becomes volatile during the Fed decision announcements. Elaborate as to why this happens.
3. What happens to market-clearing equilibrium interest rate when expected inflation increases? Why? Quote your sources in APA format.