If monetary policy makers want to target a negative interest rate, they:
A)cannot do so since negative interest rates are impossible.
B)need to stop inflation before they do it.
C)need to encourage inflation before they do it.
D)need to stop asset inflation before they do it.

Question

Quizplus · Accepted Answer

Negative interest rates are used as a policy tool to combat deflationary pressures, not inflation. By encouraging inflation, they aim to stimulate spending and investment in an economy where traditional monetary policy tools have become ineffective.

If Monetary Policy Makers Want to Target a Negative Interest