When the Policy Rate Hits Its Lower Bound and Inflation

question 27

Multiple Choice

When the policy rate hits its lower bound and inflation keeps falling,this portion of the Monetary Policy curve is

• A)downward sloping.
• B)upward sloping.
• C)flat.
• D)undetermined.

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Definitions:

Reality Principle

An ego function that negotiates between the desires of the id and the limitations of the external world.

Ego

In psychoanalytic theory, the part of the personality structure that mediates between the demands of the id, superego, and reality.

Id

A reservoir of unconscious psychic energy that, according to Freud, strives to satisfy basic sexual and aggressive drives. The id operates on the pleasure principle, demanding immediate gratification.

Personality

An individual's characteristic pattern of thinking, feeling, and acting, which makes them unique.