Exam 26: Transmission Mechanisms of Monetary Policy

The monetarist-Keynesian debate on the importance of monetary policy is unresolved because monetarists and Keynesians focus on two different types of evidence that generate conflicting conclusions. Monetarists tend to focus on ________.

The channels through which monetary policy affects economic activity are called the ________ of monetary policy.

A ________ model is one that describes how ________.

Explain how expansionary and contractionary monetary policies affect aggregate demand through the exchange rate channel.

During the Great Depression, Tobin's q ________.

Analysis of the transmission mechanisms of monetary policy provides four basic lessons for a central bank's conduct of monetary policy. These lessons include:

The subprime financial crisis caused a recession because of the ________ in adverse selection and moral hazard problems and the ________ in housing prices.

The ________ held the view that monetary policy does not matter at all for movements in aggregate output.