Changes in the federal funds rate influence the economy's growth rate through all of the following except by:

The federal funds rate plays a crucial role in shaping economic conditions, primarily through its influence on interest rates that affect saving, borrowing, and investment decisions. When the Federal Reserve alters the federal funds rate, it changes the cost of money, which impacts how consumers and businesses behave economically.

The first three choices directly relate to how changes in the federal funds rate can shape economic growth. Altering the federal funds rate affects the attractiveness of saving by influencing the interest earned on savings accounts. A higher rate typically encourages saving, while a lower rate may discourage it. Similarly, changes in the federal funds rate directly affect borrowing costs: a lower rate makes loans cheaper, encouraging borrowing and spending, while a higher rate does the opposite. Furthermore, investment spending is closely tied to interest rates; businesses evaluate potential projects based on the cost of financing them. Lower rates can spur investment as it reduces the costs to finance new projects, whereas higher rates can deter investment.

In contrast, while changes in the federal funds rate can influence inflation indirectly through economic activity, it does not cause direct changes in the rate of inflation itself. Inflation is multifaceted and can stem from various factors, including demand-pull dynamics, cost-push factors, supply chain issues, and global economic conditions.