As shown by the IS-LM model, there are two reasons that the Fed can lose control of the economy. One of these reasons is

A) federal funds rate can never reach zero percent.
B) zero federal funds rate is not sustainable.
C) household and business borrowers do not base their decision to borrow on interest rates.
D) that the zero federal funds rate achieved by the Fed is irrelevant to household and business borrowers.


D

Economics

You might also like to view...

In the early 1900s, the Homestead Act

a. was modified to allow settlers to obtain larger, more practical-sized farms. b. was repealed by Congress. c. was amended to reduce the size of a homestead from 160 acres to 80 acres. d. was amended to increase the residency requirement to 10 years.

Economics

Durable and nondurable goods and services lumped together in the expenditure approach to measuring GDP are called:

a. Personal consumption. b. Gross private domestic investment. c. Government spending. d. Inventory. e. Employee compensation.

Economics

Which of the following most accurately describes the invisible hand concept?

a. Wise central planning by government is necessary for the efficient use of resources. b. In a democratic setting, majority rule will result in the efficient use of resources. c. In a market setting, when individuals pursue their own interests, they simultaneously tend to promote the public interest. d. In a market setting, when individuals pursue their own interests, they tend to engage in activities that lower the overall economic welfare of society.

Economics

Holding other factors constant, if new technology becomes available that allows machines to produce manufactured goods more quickly and with fewer defects, then the real interest rate will ________ and the equilibrium quantity of national saving and investment will ________.

A. increase; not change B. decrease; increase C. increase; increase D. increase; decrease

Economics