Explain the concept of zero lower bound
What will be an ideal response?
If an interest rate hits zero, economists say that it has hit the zero lower bound. This language implies that zero is a barrier – or a boundary line - that nominal interest rates cannot cross.
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Potential GDP is always greater than real GDP in an economy
Indicate whether the statement is true or false
Which of the following is not a problem with examining the progressivity of the tax system over a lifetime?
a. The uncertainty over future tax code changes make forecasting of future taxes nearly impossible. b. Such accounting does not consider what the taxes are spent on. c. The fact that poor people do not live as long as wealthy individuals. d. Accurately estimating who is actually paying taxes.
Certain goods are related so that an increase in the price of one good decreases the demand for the other. These goods are: a. complements
b. substitutes. c. luxury goods. d. competing goods.
Which of the following is not an example of a barrier to entry?
a. Mighty Mitch's Mining Company owns a unique plot of land in Tanzania, under which lies the only large deposit of Tanzanite in the world. b. A chemist receives a patent for a new skin cream. c. An entrepreneur opens a cupcake bakery. d. A taxi cab driver in New York City obtains a license to legally provide transportation in New York City.