Monetary policy will never be effective if interest rates
A)Change quickly.
B)Respond to a change in the money supply,and investment spending responds to a change in the interest rate.
C)Do not respond to a change in the money supply,and investment spending does not respond to changes in the interest rate.

Question

Quizplus · Accepted Answer

If interest rates do not respond to changes in the money supply and investment spending does not respond to changes in the interest rate, monetary policy will be ineffective because the primary mechanism through which monetary policy influences the economy is through interest rates affecting investment and spending.

Monetary Policy Will Never Be Effective If Interest Rates