The Nominal Interest Rate Cannot Fall Below Zero Because

question 48

Multiple Choice

The nominal interest rate cannot fall below zero because

• A) central banks are engaged in interest rate targeting.
• B) inflation is generally too high.
• C) inflation is generally too low.
• D) financial markets cannot allow for arbitrage opportunities.
• E) financial markets do allow for arbitrage opportunities.

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Definitions:

Counterproductive Strategies

Approaches or methods that have the opposite effect of what is intended, often making a situation worse.

Deliberate Self-destruction

Intentional harm or injury inflicted on oneself, often as a coping mechanism for emotional distress.

Trade-offs

Decisions that involve sacrificing one thing to obtain another, often used in the context of making compromises.

Self-regulation

The ability to monitor and control one's behavior, emotions, or thoughts, adapting to circumstances and aligning with long-term goals.