Why Will Persistently Restrictive Monetary Policy Often Lead to Low

question 38

Multiple Choice

Why will persistently restrictive monetary policy often lead to low interest rates?

• A)Decision-makers expect the inflation rate to rise,and this will reduce nominal interest rates.
• B)Decision-makers expect deflation,and this will keep nominal interest rates low.
• C)Decision-makers expect low rates of unemployment in the future and this will reduce nominal interest rates.
• D)Decision-makers expect higher stock prices in the future and this will reduce nominal interest rates.

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