When the FOMC Raises the Federal Funds Rate, Almost Immediately

Multiple Choice

When the FOMC raises the federal funds rate, almost immediately ________ and a few weeks later the ________.

A) short-term interest rates rise; quantity of money and supply of loanable funds decrease
B) long-term interest rates rise; quantity of money and supply of loanable funds decrease
C) short-term interest rates fall; quantity of money and supply of loanable funds decrease
D) long-term interest rates rise; quantity of money and supply of loanable funds decrease.
E) short-term interest rates fall; quantity of money and supply of loanable funds increase.