From 2010 to 2017, the long term real interest rate paid by the safest corporations decreased from 3 percent to less than 1 percent. During that same period, the overnight loans rate was between 1.0 percent and 0.25 percent a year.

a) What role does the long-term real interest rate play in the monetary policy transmission process?

b How does the overnight loans rate influence the long-term real interest rate?

c) What do you think happened to inflation expectations between 2010 and 2017 and why?