Difference between revisions of "Transmission mechanism"

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''Economics''.   
 
''Economics''.   
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The way in which a change in an economic variable has an effect on the economy.  
 
The way in which a change in an economic variable has an effect on the economy.  
  
For example how a change in interest rates would affect rates of inflation or exchange rates. An increase in interest rates in the UK would lead to an appreciation of the domestic currency in the foreign exchange market as the demand for Sterling increases.
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For example how a change in interest rates would affect rates of inflation or exchange rates.  
 +
 
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An increase in interest rates in the UK would lead to an appreciation of the domestic currency in the foreign exchange market as the demand for Sterling increases.

Revision as of 13:09, 14 August 2013

Economics.

The way in which a change in an economic variable has an effect on the economy.

For example how a change in interest rates would affect rates of inflation or exchange rates.

An increase in interest rates in the UK would lead to an appreciation of the domestic currency in the foreign exchange market as the demand for Sterling increases.