Which of the Following Would Most Likely Result from the Fed

question 130

Multiple Choice

Which of the following would most likely result from the Fed imposing negative nominal interest rates in response to a financial crisis and recession?

• A) The negative interest rates would stimulate massive borrowing and spending, triggering rapid inflation in the short term.
• B) It would signal trouble to financial markets, causing people to deposit more money in banks to enhance feelings of financial security.
• C) Banks would freeze customer accounts so that they couldn't withdraw money, inciting financial panic.
• D) Customers would withdraw deposits, banks would have less money to lend, and the money supply and aggregate demand would both fall.

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Definitions:

Productivity

A measure of the efficiency of production, often expressed as the ratio of outputs to inputs in the production process.

Training

The process of enhancing the skills, capabilities, and knowledge of employees for the purpose of improving job performance.

Capital

Capital refers to financial assets or physical resources that are used in the production of goods and services, including machinery, buildings, or money invested.

Workforce

The group of people who are engaged in or available for work, either in a country or a firm.