What Are Options for Monetary Easing Using Interest Rate Policy

question 59

Multiple Choice

What are options for monetary easing using interest rate policy instruments when the rate has hit the zero lower bound?

• A) At that point, interest rate policy cannot be used.
• B) Monetary easing can still occur whenever interest rates are greater than zero at the retail level.
• C) The central bank can increase the money supply, and interest rates can be less than zero.
• D) Borrowing can be stimulated in ways other than lower rates of interest.

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Definitions:

Essential Human Freedoms

Fundamental rights considered to be the inherent entitlements of all human beings, such as freedom of speech, religion, and equality before the law.

American Neutrality

A foreign policy stance by which the United States has sought to avoid entanglement in the affairs and wars of other nations, notably during the early parts of both World Wars.

Expansionist Hopes

Aspirations or ambitions to expand a country's territory or influence.

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The national government of a federal state, where powers are divided between the central government and constituent units, such as states or provinces.