Which of the following statements is correct?
A)The bank lending channel does not reject the idea that monetary policy can affect output by changing interest rates.
B)The bank lending channel argues that monetary policy affects output only through its effect on banks' portfolio decisions regarding loans and securities.
C)The bank lending channel argues that monetary policy affects output only through its effect on the public's portfolio decisions regarding money and nonmoney assets.
D)The bank lending channel has been unable to explain the movements in bank lending observed in the 1980s and 1990s.

Question

Quizplus · Accepted Answer

The bank lending channel suggests that monetary policy can affect output by influencing banks' ability to lend, which is consistent with the idea that monetary policy can affect output by changing interest rates.

Which of the Following Statements Is Correct