If the Federal Reserve Lowers Interest Rates

Multiple Choice

If the Federal Reserve lowers interest rates:

A) the dollar will appreciate, and this will lead to higher imports and lower exports and a fall in aggregate expenditure.
B) consumption and investment will increase, leading to 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) banks will lower loan amounts, and this will lead to a fall in investment, and a fall in aggregate expenditure.