When a change in monetary policy is implemented,the initial effect on interest rates is generally the:
A) income effect.
B) liquidity effect.
C) expected inflation effect.
D) wealth effect.

Question

Quizplus · Accepted Answer

The initial effect on interest rates when a change in monetary policy is implemented is generally the liquidity effect. This refers to the influence of central bank actions on the money supply and the availability of credit in the economy, which can lead to changes in short-term interest rates. The income effect, expected inflation effect, and wealth effect may also play a role in how monetary policy affects the economy, but they are not typically the initial or primary impact on interest rates.

When a Change in Monetary Policy Is Implemented,the Initial Effect