If inflation is higher than the Federal Reserve wants, the FOMC is likely to do what at its next meeting: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Require businesses to make smaller price changes b с d Announce an increase in the Federal Funds rate target Buy bonds Require businesses to produce more

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Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.