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Sagot :
The Federal Reserve could increase interest rates.
The contractionary monetary policy woudl lead to lower investment. THus shifting AD to the left.
The Federal Reserve seeks to manipulate inflation by influencing hobby prices. while inflation is just too excessive, the Federal Reserve commonly increases interest rates to slow the economic system and bring inflation down.
The Fed also sets the discount rate, the interest fee at which banks can borrow immediately from the relevant financial institution. If the Fed raises interest rates, it increases the value of borrowing, making both credit and investment extra luxurious. This will be performed to sluggish an overheated economic system.
Federal Reserve rate hikes send the high charge higher, and that during flip way the month-to-month interest bills on present debt through the program will soon be higher. The rate of any new loans will be primarily based on the new prime charge as well.
Learn more about Federal Reserve here: https://brainly.com/question/2099883
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