A shift to a more expansionary monetary policy will have its greatest effect on
A) the interest rate on a 30-year fixed-rate mortgage.
B) the interest rate on 10-year government bonds.
C) short-term interest rates.
D) the 15-year corporate bond interest rate.

Question

Quizplus · Accepted Answer

A shift to a more expansionary monetary policy would be expected to lead to a decrease in short-term interest rates, as the central bank tries to stimulate borrowing and spending. The other interest rates mentioned may also be affected to some extent, but their sensitivity to changes in monetary policy tends to be more limited.

A Shift to a More Expansionary Monetary Policy Will Have