A headline reads fed to increase interest rates 0.25 percentage points does this

Question

A headline reads fed to increase interest rates 0.25 percentage points does this imply that the Fed directly controls interest rates in the economy if not what does this headline mean?

A headline reads fed to increase interest rates 0.25 percentage points does this imply that the Fed directly controls interest rates in the economy if not what does this headline mean?

A headline reads fed to increase interest rates 0.25 percentage points does this imply that the Fed directly controls interest rates in the economy if not what does this headline mean?

Explanation / Answer

The federal reserve directly controls the interest rates by changing the supply of money.This is done to stabilize the economy and ensure growth.If fed increases interest rate by .25% then the money demand would fall which would cause the aggregate demand in the economy and price level to fall.

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