If Interest Rate Spreads Widen,central Banks May Have to ___________

question 58

Multiple Choice

If interest rate spreads widen,central banks may have to ___________ to offset the rise interest rate spreads

• A) increase their key policy rates
• B) decrease their key policy rates
• C) increase the operating band
• D) decrease the operating band
• E) increase the effective lower bound

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Definitions:

Mental Set

A tendency to approach situations in a certain way because that method worked in the past, potentially hindering the solution of new problems.

Functional Fixedness

A cognitive bias that limits a person to using an object only in the way it is traditionally used, hindering problem-solving.

Towers of Hanoi

A mathematical puzzle that consists of three rods and a number of disks of different sizes which can slide onto any rod, presenting a problem-solving challenge.

Physics Rotation

The motion of an object about an axis, characterized by angular displacement, velocity, and acceleration.