With Respect to Consumer Behavior, the Interest-Rate Channel of Monetary

question 35

Multiple Choice

With respect to consumer behavior, the interest-rate channel of monetary policy transmission appears to be:

• A) weak because people's decisions to purchase cars or houses depend more on short-term rates rather than long-term rates.
• B) weak because people's decisions to purchase cars or houses depend more on long-term rates rather than short-term rates.
• C) strong because people's decisions to purchase cars or houses depend on the short-term rates that policymakers can change.
• D) strong because it affects both spending and saving decisions.

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Definitions:

Contract Formation

The process by which parties reach an agreement on the terms of a contract, creating mutual obligations enforceable by law.

Revocation

In general, the recalling or voiding of a prior action. In contract law, the withdrawal of an offer by the offeror prior to effective acceptance by the offeree.

Dispatched

The act of sending someone or something off to a destination or for a specific purpose, often related to the delivery of goods or services.

Power To Revoke

The legal authority to cancel or withdraw a decision, offer, or agreement.