If nominal interest rates have already been reduced to ____, monetary policy can do nothing further to combat _________ aggregate demand.

Question

Quizplus · Accepted Answer

When nominal interest rates are reduced to zero, it's referred to as the "zero lower bound." At this point, conventional monetary policy tools become ineffective at stimulating further borrowing and spending, which are necessary to combat shrinking aggregate demand.

If Nominal Interest Rates Have Already Been Reduced to ____