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

question 167

Multiple Choice

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

• A)a liquidity trap.
• B)hyperinflation.
• C)an asset bubble.
• D)maturity transformation.

---

Definitions:

Major Depression

A psychological condition marked by a constant state of sadness or a lack of enthusiasm in tasks, resulting in considerable disruption to daily functioning.

Systematic Desensitization

A behavioral therapy technique aimed at reducing phobic or anxiety responses by gradually exposing the patient to the feared object or situation.

Shaping

A method of teaching new behaviors by using reinforcement of successive approximations to the desired behavior.

Social Anxiety

A chronic mental health condition characterized by significant anxiety or fear of being judged, negatively evaluated, or rejected in a social or performance situation.