If the Federal Reserve Raises Interest Rates

Multiple Choice

If the Federal Reserve raises interest rates:

A) consumption will not be affected, but investment will rise, and this will increase aggregate expenditure.
B) consumption and investment will increase, leading a rise in aggregate expenditure and an increase in equilibrium GDP.
C) consumption and investment will decrease, leading to a fall in aggregate expenditure and a decrease in equilibrium GDP.
D) the dollar will depreciate, and this will lead to lower imports and higher exports, and a rise in aggregate expenditure.