A Promise by the Central Bank to Maintain Its Key

question 6

Multiple Choice

A promise by the central bank to maintain its key policy rate at the effective lower bound for an extended period of time is called a(n) ___________ commitment.

• A) overnight lending
• B) prime rate
• C) credit easing.
• D) zero interest rate.
• E) long-term real interest rate

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Definitions:

Infancy

A stage in human development from birth up to, but not including, puberty; in legal terms, refers to a period during which a person is considered a minor and under the protection of guardians or parents.

Negotiability

Negotiability refers to the quality of a financial instrument that enables it to be transferred from one party to another in exchange for money or as payment.

Conditional Payment

A payment that is due only upon the occurrence of a specific event or satisfaction of a particular condition.

Mortgage

An agreement in which a bank or lender provides funds to a borrower at a certain interest rate, securing the loan by temporarily taking ownership of the borrower's property. This ownership is transferred back to the borrower once the loan is fully repaid.