List the sequence of events in the transmission from a rise in .he federal funds

Question

List the sequence of events in the transmission from a rise in .he federal funds rate to a change in the inflation rate Number the items below from I through 8. Real GDP growth rate decreases. Log-term real interest rate rises. The quantity of money and supply of loanable funds decrease. Other short-term interest rates rise and the exchange rate rises. Aggregate demand decreases. Consumption expenditure, investment, and net exports decrease. Inflation rate decreases. The Fed raises the federal funds rate.

Explanation / Answer

Sequence is as below:

The Fed raises the federal funds rate,

other short-term interest rates rise and the exchange rate rises.

The quantity of money and supply of loanable funds decrease

The long-term real interest rate rises.

Consumption expenditure, investment, and net exports decrease.

Aggregate demand decreases.

Eventually the real GDP growth rate

Inflation rate decrease.

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