Professional Documents
Culture Documents
Monetary Policy
Monetary Policy
Transmission Mechanisms
The impact that changes in
the money market have
on the goods and services
market and whether that
impact is direct or indirect;
and the routes and ripple
effects created in the
money market travel to
affect the goods and
services market are known
as the transmission
mechanism.
Keynesian Transmission
Mechanisms
Because the Keynesian transmission mechanism is indirect, both
interest insensitive investment demand and the liquidity trap may occur.