Transmission of expansionary monetary policy

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Reference no: EM131193580

Which of the following correctly indicates a potential path for the transmission of expansionary monetary policy to the goods and services market?

a. A reduction in the general level of prices will increase the disposable income of households and aggregate demand.

b. Higher interest rates will tend to increase asset prices, leading to a decrease in wealth that will decrease consumer spending and aggregate demand.

c. Lower interest rates lead to a depreciation in the foreign exchange value of the dollar, an increase in net exports, and an expansion in aggregate demand.

d. Higher real interest rates will lead to a decrease in both business investment and consumer purchases of durable items, causing a decrease in aggregate demand

Reference no: EM131193580

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