(Last Word) Which of the following is a concern about a central bank going below the zero lower bound and setting negative interest rates to stimulate the economy?
A)Depositors will withdraw their money, reducing the ability of banks to make loans.
B)Negative interest rates promote financial uncertainty that reduces aggregate demand.
C)Reduced spending will start a deflationary spiral.
D)The weakening of the domestic currency would increase that nation's (or area's) trade deficit.

Question

Quizplus · Accepted Answer

Negative interest rates can lead depositors to withdraw their money to avoid paying banks to hold their funds, which can reduce the banks' ability to lend.

(Last Word) Which of the Following Is a Concern About