Negative Nominal Interest Rates Work Because

question 43

Multiple Choice

Negative nominal interest rates work because

• A)they are good for banks.
• B)they cause consumption to go down.
• C)they reduce investment.
• D)nominal interest rates cannot go above zero.
• E)they act to reduce the output gap.

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Definitions:

Quantity Demanded

It refers to the total amount of a good or service that consumers are willing and able to purchase at a given price within a specified time period.

Surplus

The condition that occurs when the quantity of a good or service supplied exceeds the quantity demanded, often leading to a decrease in prices.

Shortage

An instance in the marketplace where the need for a product or service outstrips its provision.

Equilibrium Price

The cost at which the supply and demand for goods are equal.