Which of the Following Statements Is Most Accurate About the Fed's

question 156

Multiple Choice

Which of the following statements is most accurate about the Fed's zero interest rate policy (ZIRP) ?

• A) The Fed has abandoned the ZIRP, recognizing the need to reduce nominal interest rates to below zero.
• B) As of 2016, the ZIRP is being pursued by the Fed.
• C) It ended in late 2015, with the Fed increasing the IOER and engaging in reverse repo transactions.
• D) In an effort to end the ZIRP, the Fed prohibited nonbank lending to banks.

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Definitions:

Opportunity Cost

The benefit that is missed or given up when an investor, individual, or business chooses one alternative over another.

Proposed Use

An intended or suggested way of utilizing something, often laid out in plans or discussions before implementation.

Cash

Physical money, such as coins and bills, or balances in checking or savings accounts, available for use immediately.

Differential Analysis

A decision-making process that focuses on the costs and benefits that change between decision alternatives.