Suppose That the Federal Reserve Has Recently Cut Interest Rates

Multiple Choice

Suppose that the Federal Reserve has recently cut interest rates in the economy and there is a credible forecast that the Fed will again cut interest rates in the future. A manager who is IS-MP savvy will expect that:

A) the cost of borrowing will increase in the near future.
B) interest rates will rise in the near future.
C) GDP in the economy will fall and sales will decrease in the future.
D) GDP in the economy will rise and sales will increase in the future.