If a Contractionary Monetary Policy Lowers the Price Level by More

question 29

Multiple Choice

If a contractionary monetary policy lowers the price level by more than expected,it raises the real value of consumer debt. This reduces consumer expenditure through

• A)the bank lending channel.
• B)Tobin's q.
• C)the traditional interest-rate channel.
• D)the household liquidity effect.

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Definitions:

Neutral

A term typically referring to a state of neutrality where there is no net charge, bias, or expressed preference.

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Molecule that has atoms of more than one element.

Molecule

The smallest unit of a chemical compound that can exist; composed of two or more atoms bonded together.

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