The lowest feasible level for a central bank's key policy rate is called the
A) minimum prime business rate.
B) minimum overnight lending rate.
C) benchmark rate.
D) lowest official interest rate.
E) effective lower bound

Question

Quizplus · Accepted Answer

The effective lower bound is the lowest feasible level for a central bank's key policy rate. This is because when interest rates approach zero, it becomes difficult for central banks to facilitate further monetary policy stimulation.

The Lowest Feasible Level for a Central Bank's Key Policy