When the Fed Raises the Federal Funds Rate

Multiple Choice

When the Fed raises the federal funds rate,

A) the real interest rate is unchanged so investment and consumption expenditure are not changed.
B) the real interest rate increases,thereby decreasing investment and consumption expenditure.
C) the real interest rate falls,thereby increasing investment and consumption expenditure.
D) investment and consumption expenditure increase,thereby raising the real interest rate.
E) the real interest rate increases,thereby decreasing investment and increasing consumption expenditure.