The Transmission Mechanism Flashcards
1
Q
what is the transmission mechanism
A
possible paths by which change in target cash rate can influence households and businesses
2
Q
what is the relationship between cash rate and interest rates
A
positive
3
Q
through what can IR flow through to AD
A
- savings return and cost of borrowing
- cash flow of households and firms
- asset prices and percieved wealth
- exchange rate
