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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