The zero lower bound is
A)conventional monetary policy.
B)the constraint that the nominal interest rate cannot fall below zero.
C)the constraint that consumption cannot fall below zero.
D)illegal.
E)the lower bound on money supply growth.

Question

Quizplus · Accepted Answer

The zero lower bound is the constraint that the nominal interest rate cannot fall below zero. This occurs when interest rates are already low and the central bank has little room to further stimulate the economy through conventional monetary policy measures.

The Zero Lower Bound Is