When an economy is at a zero lower bound, a central bank looking to stimulate the economy can:

Question

Quizplus · Accepted Answer

The zero lower bound refers to the fact that the interest rate cannot be lowered any further, as it has already been brought down to zero. In such a scenario, the central bank can use quantitative easing as a means of stimulating the economy. Quantitative easing involves the purchase of government bonds or other securities from the market, which in turn injects money into the economy and helps to raise inflation rates. While the other options may have some impact on the economy, they are unlikely to be as effective as quantitative easing in a zero lower bound scenario.

When an Economy Is at a Zero Lower Bound, a Central