Pearson eText Economics of Money, Banking and Financial Markets, The, Business School Edition -- Instant Access (Pearson+)
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Chapter 25, Problem 20Q
To determine

  1. The effect on the economy because of global financial crisis, according to the household effect channel
  2. Based on the given information, the alteration to the answer in part (a)

Concept introduction:

Household liquidity effect channel states that when interest falls, the stock prices increase because the stocks are seen as a better option to invest rather than investing in other alternatives.

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