When Economists State That There Is a Zero Bound on Nominal

question 141

Multiple Choice

When economists state that there is a zero bound on nominal interest rates, they mean that the:

• A) real interest rate cannot go below zero.
• B) nominal interest rate cannot go below zero.
• C) real interest rate can very well be negative.
• D) nominal interest rate can always go below zero.

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Definitions:

Rectal Mucosa

The lining of the rectum, which is sensitive to damage, disease, and the absorption of medications.

Meconium Stool

The first stool passed by a newborn, composed of materials ingested during the time in the uterus, including mucus, skin cells, and amniotic fluid.

Edematous

Describing tissue that is swollen due to the accumulation of excess fluid in the body’s tissues.

Hydrocele

A fluid-filled sac surrounding a testicle that causes swelling in the scrotum, common in newborns.