When economists speak of the "zero lower bound problem" that the Fed sometimes faces, what are they referring to? 1. It is when short term interest rates are close to zero meaning the Fed can no longer use changes in interest rates to stimulate the economy 2. It is when economic growth in the economy has reached zero percent and the Fed must use aggressive monetary policy 3. It is when the Fed has sold all the securities on its balance sheet and can no longer impact the money supply using open market operations 4. It is when banks choose to hold no excess reserves, making it impossible for the Fed to lower the discount rate
When economists speak of the "zero lower bound problem" that the Fed sometimes faces, what are they referring to? 1. It is when short term interest rates are close to zero meaning the Fed can no longer use changes in interest rates to stimulate the economy 2. It is when economic growth in the economy has reached zero percent and the Fed must use aggressive monetary policy 3. It is when the Fed has sold all the securities on its balance sheet and can no longer impact the money supply using open market operations 4. It is when banks choose to hold no excess reserves, making it impossible for the Fed to lower the discount rate
Chapter13: Monetary Policy
Section: Chapter Questions
Problem 7E
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When economists speak of the "zero lower bound problem" that the Fed sometimes faces, what are they referring to?
1. It is when short term interest rates are close to zero meaning the Fed can no longer use changes in interest rates to stimulate the economy
2. It is when
3. It is when the Fed has sold all the securities on its balance sheet and can no longer impact the money supply using open market operations
4. It is when banks choose to hold no
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