The initial effect of a change in monetary policy appears in ____ and only later in ____.
A) the aggregate economy, financial markets
B) financial markets, the aggregate economy
C) bond markets, stock markets
D) stock markets, bond markets
E) stock markets, the aggregate economy

Question

Quizplus · Accepted Answer

The initial effect of a change in monetary policy is usually seen in financial markets, such as changes in interest rates, stock prices, and exchange rates. It takes time for these changes to affect the aggregate economy, such as changes in economic growth, inflation, and employment. Therefore, option B is the best choice as it correctly identifies the sequence of events.

The Initial Effect of a Change in Monetary Policy Appears