The zero bound on nominal interest rate hypothesis claims that
A) if the rate of inflation is low,the nominal interest rate will be high.
B) the nominal interest rate can be negative.
C) the real interest rate cannot be negative.
D) the lower bound on both the nominal and the real interest rates are zero.
E) because the nominal interest rate cannot be negative,the central bank may lose the ability to stimulate the economy with rate cuts if the inflation rate and,therefore,the nominal interest rate is low to begin with.
Correct Answer:
Verified
Q181: Deflation is not a sensible policy goal
Q182: According to the price distortion hypothesis
A) inflation
Q183: In what circumstances would lenders most benefit?
A)
Q184: Economists on both sides of the inflation
Q185: When inflation is anticipated and the government
Q186: Assuming that because one consumer gains from
Q187: The Canadian consumer price index fell from
Q188: When the overall price level falls in
Q189: The downward nominal wage rigidity hypothesis says
Q191: Canadian economists who prefer 'low' inflation,that is,inflation
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents