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The Financial Effects Of Monetary Policy On Interest Rates
In summary of Michael Darby’s article involving , three specific effects emerge as the most influential. Darby suggests that an increase in the rate of growth of the money supply leads to a pattern of changes in the interest rate that reflects the interaction of the liquidity, income, and expectations effects which vary over time in relative strength. The liquidity effect involves the immediate impact of monetary on interest rates. The income effect pertains to the growth path rate of price levels. Lastly, the expectations effect deals with expected rates of inflati ....
Word count: 1334 - Page count: 5
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