The Direct Impact on Spending of Short-Term Interest Rate Changes

question 28

Multiple Choice

The direct impact on spending of short-term interest rate changes by central banks is:

• A) definitely the strongest of all transmission mechanisms.
• B) not that powerful.
• C) only effective for consumption but not investment.
• D) only effective for net exports but not for investment and consumption.

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Definitions:

Ultimate Consumer

The end user of a product or service, who purchases and uses goods and services for personal use rather than for resale or production.

Increase Profitability

Strategies or actions aimed at enhancing a company's financial gains by increasing revenue, reducing costs, or both.

Operate Efficiently

The ability of an organization to maximize outputs while minimizing inputs and waste.

Maintain Price

The strategy or practice of keeping the price of a product or service at a certain level, often to manage competition or market perception.