MP1 mechanics: lower rates → (a) wealth effect via asset price appreciation, (b) lower debt service → more spending, (c) cheaper credit → more borrowing. Broadest impact because it affects all asset values simultaneously. Loses effectiveness at ZLB.
MP1 mechanics: lower rates → (a) wealth effect via asset price appreciation, (b) lower debt service → more spending, (c) cheaper credit → more borrowing. Broadest impact because it affects all asset values simultaneously. Loses effectiveness at ZLB.