When Monetary Policy Works by Affecting the Supply and Demand

question 57

Multiple Choice

When monetary policy works by affecting the supply and demand for credit,the mechanism is referred to as

• A)the exchange rate channel.
• B)the interest rate channel.
• C)the credit channel.
• D)the fiscal channel.

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Definitions:

Depolarize

To decrease the electrical potential across the cellular membrane as a prelude to generating an action potential.

Visceral Smooth Muscle

Muscle tissue found within the walls of internal organs, responsible for their involuntary movement such as contraction and relaxation.

Gap Junctions

Specialized intercellular connections that facilitate the direct transfer of ions and small molecules between the cytoplasm of neighboring cells.

Independent Unit

An entity or module that operates or exists independently from other similar units.