Th e increase in the income due to the increase in the government expenditure is equal to 1/1 b G. Th e mechanism by which the changes in the monetary policy aff ect the aggregate demand and, thus,...

Th e increase in the income due to the increase in the government expenditure is equal to 1/1 b G.

Th e mechanism by which the changes in the monetary policy aff ect the aggregate demand and, thus, the income level

is called the monetary transmission process.