Explanation:
Under rational expectations and continuous market clearing, only unanticipated policy shocks can affect real variables; anticipated policy is neutral.
Explanation:
The credit channel (or financial-accelerator mechanism) stresses that monetary policy affects real activity not only through interest rates but also through changes in the availability and cost of external finance for borrowers.
Explanation:
In a mixed economy, the government intervenes to provide public goods, correct externalities and redistribute income, but does not completely control all production decisions, which remain partly with the private sector.
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