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Based on what we have studied earlier in the course, how would a lower FFR (from...

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Economics

Based on what we have studied earlier in the course, how would a lower FFR (from 4.5% to 4%) affect the aggregate demand (AD) curve, and, as a result, GDP and the price level? A. With a lower FFR, consumption ( C) and investments (I) will increase, leading to a rightward shift in AD, hence higher GDP but also inflation. B. There will be no impact on AD since neither consumption ( C) and investments (I) are affected by interest rates. C. With a lower FFR, consumption ( C) and investments (I) will decline, leading to a leftward shift in AD, hence lower GDP and deflation. D. With a lower FFR, consumption ( C) and investments (I) will increase, leading to a rightward shift in AS, hence higher GDP but deflation.

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