FIs play a significant role in the transmission of monetary policy.

Question

Quizplus · Accepted Answer

Financial institutions (FIs) such as banks and credit unions are intermediaries between savers and borrowers. They lend or invest the money they receive from savers, and also help transfer funds between savers and borrowers. When a central bank implements monetary policy, such as adjusting interest rates, this can ultimately impact the lending and investment choices made by FIs. This, in turn, can affect the overall level of economic activity and inflation, making FIs a critical part of the transmission of monetary policy.

FIs Play a Significant Role in the Transmission of Monetary