Analysis of the transmission mechanisms of monetary policy provides four basic lessons for a central bank's conduct of monetary policy. These lessons include:
A) Monetary policy can be highly effective in reviving a weak economy so long as short-term interest rates are not too close to zero.
B) Avoiding fluctuations in the level of unemployment is an important objective of monetary policy, thus providing a rationale for interest-rate stability as the primary long-run goal for monetary policy.
C) Other asset prices beside those on short-term debt instruments contain important information about the stance of monetary policy because they are important elements in various monetary policy transmission mechanisms.
D) A and B only.

Question

Quizplus · Accepted Answer

Other asset prices, such as long-term interest rates, stock prices, and exchange rates, provide important information about the stance of monetary policy and are crucial in the transmission mechanisms of monetary policy.

Analysis of the Transmission Mechanisms of Monetary Policy Provides Four