Suppose That the Federal Reserve Has Recently Raised Interest Rates

Multiple Choice

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

A) the cost of borrowing will decrease in the future.
B) interest rates will fall 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.