The real interest rate for investments reflects not only the short-term real interest rate set by the central bank, but also the financial frictions
When the policy rate has hit the floor of zero, to stimulate the economy at given inflation rates, policymakers can A) lower the financial frictions.
B) lower the short-term real interest rate.
C) lower both the short-term real interest rate and the financial frictions.
D) lower the policy rate.
A
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At the beginning of the Vietnam War, increased military spending in the United States decreased unemployment
Indicate whether the statement is true or false
In the long run, the quantity supplied of most goods
a. will increase in almost all cases, regardless of what happens to price. b. cannot respond at all to a change in price. c. can respond to a change in price, but the change is almost always inconsequential. d. can respond substantially to a change in price.
The effect of an exchange rate system on the price level between countries is that:
A) exchange rate volatility causes the prices to converge between countries. B) a fixed exchange rate results in price convergence. C) a fixed exchange rate results in price divergence. D) all member nations of the ERM saw a divergence in prices.
Which of the following is the most likely effect of lower apple juice prices on the price and quantity purchased of orange juice, a substitute product?
A. The price of orange juice will increase, and the quantity purchased will fall. B. The price of orange juice will fall, and the quantity purchased will increase. C. The price of orange juice will increase, and the quantity purchased will increase. D. The price of orange juice will fall, and the quantity purchased will fall.