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When Borrowers Don't Respond to Short-Term Interest Rates of Zero

question 167

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When borrowers don't respond to short-term interest rates of zero, the economy is in:


Definitions:

Minimum Payment

The smallest amount of money that one must pay on a debt for a particular period, often used in the context of credit card debts.

Financial Distress

A situation where an individual or company cannot meet or has difficulty paying off its financial obligations to creditors.

Anchored

A cognitive bias where an individual relies too heavily on an initial piece of information (the "anchor") when making subsequent judgments or decisions.

Prospect Theory

A behavioral economic theory that describes how people choose among probabilistic alternatives and assess the risk of loss differently from the potential for gains.

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