Question: 1.1 Fill in the missing values in the table below. (11) 1.2 Use the completed table to answer the following questions. (5) a. Which situations

 1.1 Fill in the missing values in the table below. (11)

1.1 Fill in the missing values in the table below. (11) 1.2 Use the completed table to answer the following questions. (5) a. Which situations correspond to the case where the nominal policy interest rate is at the zero lower bound? (1) b. Which situation has the highest risk premium? (1) c. What two factors contribute to the risk premiums? (1) d. Why is it so important when the nominal policy interest rate is at the zero lower bound to maintain a positive expected rate of inflation? (2)

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