If nominal interest rates have a lower bound of zero and deflation occurs at 3% (i.e., the inflation rate equals -3%, then the lowest real interest rate possible is
A) -3%.
B) 0%.
C) 3%.
D) 6%.
C
You might also like to view...
The larger is the reserve ratio, the:
A. smaller is the money multiplier, and the less money will be created in the economy. B. larger is the money multiplier, and the more money will be created in the economy. C. larger is the money multiplier, and the less money will be created in the economy. D. smaller is the money multiplier, and the more money will be created in the economy.
How many members can serve on the Board of Governors of the Federal Reserve System?
A. 9 B. 7 C. 14 D. 12
Based on our understanding of the model presented in Chapter 3, a reduction in investment will cause
A) an increase in the multiplier. B) a reduction in the multiplier. C) a reduction in the marginal propensity to save. D) a reduction in output. E) both B and D
Intermediaries, known as middlemen, specialize in
A. negotiating low prices for buyers. B. reducing transaction costs. C. encouraging consumers to buy goods on credit, rather than with cash. D. negotiating high prices for sellers.