How can a contractionary monetary policy be effective

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In the bank lending channel, 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?

Reference no: EM131303746

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