The Situation in Which Short-Term Interest Rates Are Pushed to Zero,leaving

question 96

Multiple Choice

The situation in which short-term interest rates are pushed to zero,leaving the central bank unable to lower them further is known as

• A)the Taylor rule.
• B)a liquidity trap.
• C)a zero-sum game.
• D)an interest rate panic.

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Definitions:

Great Depression

A significant international economic collapse that happened during the 1930s.

Bank Failures

Occur when a bank is unable to meet its obligations to depositors or creditors and is either closed or taken over by regulatory authorities.

Bank Management

The process of overseeing and running a bank's day-to-day operations and financial activities.

Barter

An exchange method where goods and services are directly traded for other goods and services without using a medium of exchange, like money.