According to the household liquidity effect,an expansionary monetary policy causes a ________ in the value of households' financial assets,causing consumer durable expenditure to ________.
A)decline;rise
B)rise;rise
C)rise;fall
D)decline;fall

Question

Quizplus · Accepted Answer

An expansionary monetary policy typically leads to an increase in the value of households' financial assets as interest rates fall and asset prices rise. This increase in asset values makes households feel wealthier, which in turn encourages them to spend more, including on consumer durables.

According to the Household Liquidity Effect,an Expansionary Monetary Policy Causes