When the Fed Lowered Short-Term Interest Rates to near Zero

question 80

Multiple Choice

When the Fed lowered short-term interest rates to near zero but the policy didn't seem to stimulate the economy enough, the Fed in 2009 also began conducting the policy of expansive buying of bonds now known as:

• A) ZIRP (zero interest rate policy)
• B) QE (quantitative easing)
• C) Operation Twist
• D) Zero Lower Bound

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Definitions:

Productive Workers

Individuals who efficiently produce goods or services, contributing to the overall output of a business or economy.

Marginal Expenditure

The additional cost incurred from purchasing or producing one more unit of a good or service.

Average Expenditure

The average amount of money spent by consumers or firms on a particular good or service.

Monopsony

A market condition where there is only one buyer for many sellers, giving the buyer significant power over prices.