Question

If interest rates are at the zero lower bound:A. the effectiveness of monetary policy increases. B. monetary policy is not very effective. C. automatic stabilizers don't work. D. monetary policy is more effective than fiscal policy

Answer 1

B. monetary policy is not very effective

Step-by-step explanation:

• The zero lower bound is similar; lower bounds and is macroeconomic problems and this occurs when the short terms nominal interest rate is an at the near top the liquidity trap and is issues of the paper currency by the government and effective guarantee zero of normal interest rates acting as an interest rate floor.

• The Zero interest rate is also referred to as the lower limit of the 0% for a short term rate beyond which monetary policy is not very effective.