Why does the self-correcting mechanism stop working when the policy rate hits the zero lower bound?
Question:
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 60% (15 reviews)
Because a negative output gap which leads to a fall in the shortrun aggregate s...View the full answer
Answered By
Mugdha Sisodiya
My self Mugdha Sisodiya from Chhattisgarh India. I have completed my Bachelors degree in 2015 and My Master in Commerce degree in 2016. I am having expertise in Management, Cost and Finance Accounts. Further I have completed my Chartered Accountant and working as a Professional.
Since 2012 I am providing home tutions.
3.30+
2+ Reviews
10+ Question Solved
Related Book For
The Economics of Money Banking and Financial Markets
ISBN: 978-0133836790
11th edition
Authors: Frederic S. Mishkin
Question Posted:
Students also viewed these Micro Economics questions
-
Explain how the zero lower bound for the interest rate controlled by the Fed has an impact on the effectiveness of monetary policy. Discuss what mix of monetary and fiscal policy can be used to...
-
Use Figure 14-5 to explain why the zero lower bound meant that monetary policy could not provide as much stimulus to the economy in 2010 as implied by the Taylor Rule. In Figure 14-5 The Taylor Rule...
-
When monetary policymakers hit the zero nominal-interest-rate bound with their policy rate, they have the option to turn to unconventional tools of monetary policy. How do these unconventional tools...
-
Identify each of the following items relating to sections of a balance sheet as Current Assets (CA), Property and Equipment (PE), Current Liabilities (CL), Long-Term Liabilities (LTL), or Owners...
-
Find the potential on the axis of a uniformly charged solid cylinder, a distance z from the center. The length of the cylinder is L, its radius is R, and the charge density is p. Use your result to...
-
You push on a refrigerator, as in Figure 2.1, but the refrigerator does not move. Hence, even though you are applying a nonzero force, the acceleration is still zero. Explain why this does not...
-
Green Spaces Make Kids Smarter A recent article claims that "Green Spaces Make Kids Smarter." The study described in the article involved 2,623 schoolchildren in Barcelona. The researchers measured...
-
Denominator-level problem. Speedy, Inc. is a manufacturer of the very popular G36 motorcycles. The management at Speedy has recently adopted absorption costing and is debating which denominator level...
-
What role does trust play in fostering fruitful collaboration among stakeholders in strategic alliances and partnerships? Explain
-
McMullen Company purchased tool sharpening equipment on May 1 for $162,000. The equipment was expected to have a useful life of three years, or 12,000 operating hours, and a residual value of $3,600....
-
How does the policy rate hitting a floor of zero lead to an upward-sloping aggregate demand curve?
-
What nonconventional monetary policies shift the aggregate demand curve, and how do they work?
-
The equity section of Neely Company Ltd. consists of share capital-ordinary (10 par) 2,000,000 and retained earnings 500,000. A 15% share dividend (30,000 shares) is declared when the market price...
-
Discuss the long-term interpersonal, social, and psychological effects on victims of child sexual abuse.
-
Enumerate the psychological effects experienced by victims of burglary. When is the distress level likely to be more pronounced in the victims?
-
What are the factors that predict recidivism for CSOs?
-
Discuss the surveillability and occupancy cues studied by Bennett and Wright.
-
Discuss research findings on female sex offenders. review Questions
-
Bravo Bags is a luggage retailer that operates out of a shopping mall. As required by the landlord, Bravo Bags has hired Brad Pope, CPA, to provide a report to the landlord as to whether Bravo Bags...
-
Explain the regulation of the secretions of the small intestine.
-
Suppose you visit with a financial adviser, and you are considering investing some of your wealth in one of three investment portfolios: stocks, bonds, or commodities. Your financial adviser provides...
-
Since monetary policy changes made through the fed funds rate occur with a lag, policymakers are usually more concerned with adjusting policy according to changes in the forecasted or expected...
-
When the euro appreciates, are you more likely to drink California wine or French wine?
-
How do norms intersect with systems of power and privilege, and how do dominant groups reinforce or challenge normative standards to maintain their social position?
-
You are earning $41,000 a year in city with a low cost of living. You are considering taking a job in another city where the cost of living is 15% higher. What is the minimum salary you would need to...
-
Describe qualitative factors that could also complement the ratio analysis and play an important role in improving financial performance.
Study smarter with the SolutionInn App