CASE STUDY: JAPAN’S LOST DECADE Japan's “Lost Decade” is the term for the economic crisis that hit Japan in the 1990s. Dusinsnifietnmeedd Japan experienced low to negative economic growth and declining prices. In response, the Bank of Japan progressively cut interest rates, and by the late 1990s, the interest rates had dropped to almost zero. Japan was caught in a liquidity trap. Despite its efforts, the Bank of Japan could not stimulate spending. Chronic disinflation (inability of prices to go up as fast as before) and deflation (fall of prices because of decresed spending) were constant problems. In the early 2000s; to spur demand, the Bank of Japan implemented quantitative e, ‘his policy involved expanding the monetary base and n owth instead of interest o The i nn asset Bank of Japan © interest rates at zero and raised then apply assets. That strategy worked to il Seonti ight against declin- Stabilize price atinued to fight agains y temporarily. Deflation ke INg prices, ee ee from the quantity

Describes Japan's Lost Decade and compares it to Quantitative Easing Policy employed by the US Government. In your research be sure to address the impact of the policies and explain the results based on macroeconomic theory. Was the decision employs Quantitative Easing in the US correct and what are the expected results.

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Japans Lost Decade compared to Quantitative Easing Policy Japans financial execution since the mid1990s has been disappointing both in connection to its own history and with respect to the record of o... View the full answer