What Is the Zero Lower Bound and Why Is It

question 113

Short Answer

What is the zero lower bound and why is it important?

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Definitions:

Circular Flow

A model in economics that describes the movement of resources, goods and services, and money among different sectors in an economy.

Leakages-Injections Approach

An economic understanding and analysis of how savings, taxes, and imports (leakages) offset government spending, investments, and exports (injections) in the circular flow of income.

Value Added

The increase in worth of a product or service as a result of a particular process, often characterized by the difference between the price of the finished product and the cost of the inputs involved in making it.

Raw Materials

Basic materials extracted from natural resources or produced through agriculture, which are used in the production of goods and services.