The connection between changes in money markets and changes in aggregate demand is called the

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The connection between changes in money markets and changes in aggregate demand is known as the monetary transmission mechanism. This term refers to the process by which monetary policy decisions affect the economy through changes in financial markets, including interest rates, exchange rates, and asset prices. The mechanism involves various channels, such as the interest rate channel, credit channel, and exchange rate channel, through which monetary policy influences aggregate demand, output, and inflation. The other options, such as the Phillips Curve, real balances effect, and quantity theory of money, all relate to different concepts or theories in the field of monetary economics but do not directly capture the relationship between money markets and aggregate demand.

The Connection Between Changes in Money Markets and Changes in Aggregate