The monetary transmission mechanism describes how changes in the the money market possibly caused by monetary policy) cause changes in the interest rate, which then cause changes in
1) aggregate demand and real GDP;
2) desired investment and net exports;
3) the price level.
A) 1 only
B) 2 only
C) 3 only
D) 1 and 2
E) 1, 2, and 3
Correct Answer:
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