At the zero lower bound
A) monetary policy has the usual effects.
B) conventional monetary policy is all that works.
C) government spending has no effects.
D) open market purchases of government bonds by the central bank have no effects.
E) consumption goes to zero.

Question

Quizplus · Accepted Answer

At the zero lower bound, traditional monetary policy tools like open market operations become ineffective because interest rates cannot be lowered further to stimulate the economy.

At the Zero Lower Bound