Steps in the transmission of monetary policy are
Answer:
Answer:- The steps in the transmission of monetary policy are
Correct Answer:- The federal reserve lowers the federal funds rate, which lowers the real interest rate, and leads to an increase in aggregate demand.
Reason:- The steps in transmission of monetary policy are decreasing the fund rates resulting in lowered interest rate and thus improving aggregate demand.
Answer:- Suppose the Fed raises the federal funds rate. Put the following changes in order in which they occur, starting with the changes that take place almost immediately and ending with the changes that may occur up to two years afterwards:
Correct Answer:- i-ii-iii-iv
Reason:- When the fund rates are increased, both the short term and long term interest rates will decrease causing the inflation to rise and thus aggregate demand will go down.