Expansionary monetary policy causes _____ in interest rates in the short run and _____ in interest rates in the long run.

Question

Quizplus · Accepted Answer

Expansionary monetary policy typically leads to a fall in interest rates in the short run as the central bank increases the money supply. In the long run, interest rates may not change significantly as other factors come into play, adjusting the economy back to its natural rate.

Expansionary Monetary Policy Causes _____ in Interest Rates in the Short