At the end of 2008, the federal funds rate in the United States was close to zero. Which of the Jfollowing is a major concern associated with such a low rate?
A) That traditional monetary policy will have no impact on the economy.
B) Such a low rate spurs excessive consumption and investment spending which may lead to inflation.
C) Such a low rate spurs excessive consumption and investment spending which may lead to deflation.
D) Economic agents might be unwilling to borrow in anticipation of even lower interest rates.
Correct Answer:
Verified
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