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Question
With respect to consumer behavior, the interest-rate channel of monetary policy transmission appears to be:A. weak because people's decisions to purchase cars or houses depend more on short-term rates rather than long-term rates.
B. weak because people's decisions to purchase cars or houses depend more on long-term rates rather than short-term rates.
C. strong because people's decisions to purchase cars or houses depend on the short-term rates that policymakers can change.
D. strong because it affects both spending and saving decisions.
Answer
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