In the case of zero inflation, during a recession a central bank would:
A) have little leeway to further reduce interest rates in order to stimulate the economy.
B) not be able to engage in any type of policy to stimulate the economy.
C) spend more money in order to stimulate the economy.
D) have to print more money in order to stimulate the economy.

Question

Quizplus · Accepted Answer

In the case of zero inflation, the central bank would have already set interest rates at their lowest level possible, leaving little room for further reductions to stimulate the economy during a recession.

In the Case of Zero Inflation, During a Recession a Central