The two channels through which monetary policy can influence behavior in the goods market are
A) investment and government spending.
B) investment and consumption.
C) government spending and consumption.
D) taxation and investment.

Question

Quizplus · Accepted Answer

Monetary policy can influence behavior in the goods market through investment and consumption. Lower interest rates can encourage businesses to borrow and invest in new capital goods, which can stimulate economic growth. Lower interest rates can also make borrowing for consumption more attractive, encouraging households to spend more, which can increase demand for goods and services.

The Two Channels Through Which Monetary Policy Can Influence Behavior