The routes or channels that ripple effects created in the money market travel to impact the goods-and-services market are known as
A) the transmission lag.
B) monetary policy.
C) the liquidity trap.
D) the transmission mechanism.

Question

Quizplus · Accepted Answer

The routes or channels that ripple effects created in the money market travel to impact the goods-and-services market are commonly known as the transmission mechanism. This mechanism is responsible for the transmission of monetary policy from the central bank to the economy. The transmission mechanism consists of several channels through which monetary policy affects the economy. Examples of these channels include changes in interest rates, lending standards, asset prices, and expectations of economic activity.

The Routes or Channels That Ripple Effects Created in the Money