A negative nominal interest rate may not be good policy because
A) it makes the output gap go up.
B) it makes investment go down.
C) could produce inefficiencies in the banking system.
D) could produce inefficiencies at Federal Reserve Banks.
E) it makes consumers too optimistic, and the economy overheats.
Correct Answer:
Verified
Q42: In the New Keynesian model, an increase
Q43: Negative nominal interest rates work because
A) they
Q44: In the New Keynesian model, an increase
Q45: If the central bank in a New
Q46: A traditional liquidity trap is problematic for
Q48: If there are total factor productivity shocks
Q49: The argument that the nominal wage is
Q50: According to the New Keynesian model, in
Q51: A key criticism of New Keynesian models
Q52: A classical objection to Keynesian sticky price
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents