When the Interest Rate Is So Low That the Opportunity

question 151

Multiple Choice

When the interest rate is so low that the opportunity cost of holding money is zero, then economists say we have reached:

• A) the era of total liquidity.
• B) the zero lower bound situation, which means the U.S. economy may be in a liquidity trap.
• C) full monetary saturation.
• D) a situation in which a nation must use caution, since monetary policy is "super" effective.

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