Alternate transmission mechanisms for expansionary monetary policy do NOT include the idea that monetary expansion can:
A) lower long-term interest rates.
B) boost inflationary expectations.
C) appreciate the currency.
D) create excess cash balances.

Question

Quizplus · Accepted Answer

Monetary expansion typically leads to a depreciation of the currency rather than an appreciation. This is because increasing the money supply usually results in lower interest rates, which can reduce foreign investment in domestic assets, leading to a decrease in the currency's value.

Alternate Transmission Mechanisms for Expansionary Monetary Policy Do NOT Include