In the bank lending channel as it operates through commercial banks, an expansionary monetary policy is not

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In the bank lending channel as it operates through commercial banks, an expansionary monetary policy is not dependent for its effectiveness on a reduction in interest rates, and a contractionary monetary policy is not dependent for its effectiveness on an increase in interest rates. How can an expansionary monetary policy be effective without reducing interest rates to  stimulate spending, and how can a contractionary monetary policy be effective without increasing interest rates to slow down spending?

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Money, Banking, and the Financial System

ISBN: 978-0134524061

3rd edition

Authors: R. Glenn Hubbard, Anthony Patrick O'Brien

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