Which of the Following Is True of an Economy That

question 15

Multiple Choice

Which of the following is true of an economy that has hit the zero lower bound?

• A)The money supply in the economy increases rapidly as additions are made to the monetary base.
• B)Any increase increase in its monetary base is exactly offset by a decline in its money multipliers.
• C)Any short-term bond would provide a return that is much lower than the return from holding cash.
• D)The economy's interest rates decline when there is an increase in the monetary base.

---

Definitions:

Stress Management

Techniques and practices aimed at controlling a person's levels of stress, especially chronic stress, for the purpose of improving everyday functioning.

Relaxation Training

A therapeutic technique aimed at teaching individuals methods to reduce stress, anxiety, and tension through practices like deep breathing, meditation, or progressive muscle relaxation.

Psychological

Pertaining to the mind or mental processes, often relating to behavior, emotions, and thought processes.

Hormonal Stress Responses

The activation of the body's endocrine system in response to stress, resulting in the release of hormones like cortisol and adrenaline.