Question

Monetary policy most directly impacts :

Answer 1

Answer:

1)consumer and 2)investment spending

Explanation:

Monetary policy is whether the government, the central bank or the monetary authority directs the economy through money supply management or foreign exchange market transactions. Monetary theory allows the determination of the optimal monetary policy for the economy. Monetary policy is often referred to as "expanding" or "contractionary" monetary policy. While expansionary monetary policy means increasing the total money supply in the economy, contractionary monetary policy, contrary to the expansionary monetary policy, means reducing the total money supply in the economy. While expansionary monetary policy is generally applied to overcome the unemployment (recession) in the economy (assuming that the amount of money that increases as a result of the increase in money supply will decrease the interest which is the price of money); Contractionary monetary policy is implemented with the aim of lowering the inflation rate (assuming that the decrease in money supply will raise interest rates, the rising interest rate will reduce the marginal consumption trend of people and increase the marginal saving trend).

The expansionary monetary policy leads to increase on consumer and investment spending after the interest rates are lowered. Those are what we searched for. Government spending are usually increased or decreased while the fiscal policy goes to work. Monetary policy actually has some effects on exports and imports but we can not say these are direct ones. Because changes in interest rates then leads to change on exchange rates, following by this, the import and export will be affected, that's why it is not direct cause.