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:

Ritual

The symbolic affirmation of values by means of culturally standardized utterances and actions.

Symbolic Affirmation

The act of validating or reinforcing a belief, value, or identity through symbols, rituals, or statements that have deep personal or cultural significance.

Culturally Standardized

Practices, norms, or products that have been widely accepted and integrated into a culture.

Disposition

Final placement or disposal of a dead person.