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How Should the Central Bank of a Country Design Its

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How should the central bank of a country design its monetary policy during a recession if the nominal interest rate has already hit the zero lower bound?


Definitions:

Stagflation

A situation in an economy where the inflation rate is high, economic growth rate slows, and unemployment remains steadily high.

Oil Prices

The cost per barrel of crude oil as determined by global supply and demand factors.

General Theory

A broad and fundamental principle or set of principles intended to explain a major phenomenon or field of study.

Full Employment

The level of employment where all who are willing and able to work at current wage rates are employed; often considered an indication of an economy's health.

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