A Negative Nominal Interest Rate May Not Be Good Policy

question 65

Multiple Choice

A negative nominal interest rate may not be good policy because

• A)could produce inefficiencies in the banking system.
• B)it makes investment go down.
• C)could produce inefficiencies at Federal Reserve Banks.
• D)it makes the output gap go up.
• E)it makes consumers too optimistic, and the economy overheats.

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Definitions:

Personality Psychologist

A psychologist who specializes in studying patterns of thoughts, feelings, and behaviors that make a person unique.

Introversion

A personality trait characterized by a focus on internal feelings rather than external sources of stimulation, often resulting in the preference for solitary or small-group activities.

Kurt Lewin

A German-American psychologist known for developing several key theories in social and applied psychology, including the theory of change, action research, and group dynamics.

Practical

Denotes something that is oriented towards action or utility, often emphasizing effectiveness and convenience in real-life situations.