The volume of loans that the Fed makes to banks is affected by the Fed's setting of the interest rate on these loans, called the

According to the interest-rate effect, aggregate demand slopes downward (negatively) because

A. lower prices increase money holdings, decrease lending, interest rates rise, and investment spending falls. B. lower prices increase the value of money holdings and consumer spending increases. C. lower prices decrease the value of money holdings and consumer spending decreases. D. lower prices reduce money holdings, increase lending, interest rates fall, and investment spending increases.

The U.S. economy is experiencing rising output, rising employment, rising incomes and falling unemployment. These conditions best describe a business cycle

A) expansion. B) peak. C) trend. D) recession. E) trough.