Purchase Solution

Monetary Policy and Interest Rates

Not what you're looking for?

Ask Custom Question

Most economists consider interest rates to be the principal instrument by which monetary policy affects economic activity. However, significant changes in the structure of financial markets have altered the interest rate channel. Do you agree or disagree with this point of view?

419 words, no references

Purchase this Solution

Solution Summary

Monetary policy and interest rates are examined. The significant changes in the structure of financial markets with altered interest rate channels are provided.

Solution Preview

Most economists consider interest rates to be the principal instrument by which monetary policy affects economic activity. However, significant changes in the structure of financial markets have altered the interest rate channel. Do you agree or disagree with this point of view?

The monetary transmission mechanism is one of the most studied areas of monetary economics for two reasons. First, understanding how monetary policy affects the economy is essential to evaluating what the stance of monetary policy is at a particular point in time. Even if a central bank's policy instrument, for example, the federal funds rate in the United States, is low, monetary policy may well be restrictive because of effects that monetary policy has had on other asset ...

Purchase this Solution


Free BrainMass Quizzes
Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.