The zero lower bound for interest rates is:
A) the fact that interest rates can't go below zero.
B) a theory that says that interest rates should have no bounds or limits.
C) a law that prohibits credit unions from paying interest on checkable deposits.
D) only a theory that never actually occurs in the real world.

Question

Quizplus · Accepted Answer

The zero lower bound refers to the fact that interest rates cannot go below zero, as it is not possible for lenders to pay borrowers to take their money. This is a real-world phenomenon that has been witnessed in several economies, such as Japan and the Eurozone.

The Zero Lower Bound for Interest Rates Is