When the interest rate is so low that the opportunity cost of holding money is zero, then economists say we have reached:
A) the era of total liquidity.
B) the zero lower bound situation, which means the U.S. economy may be in a liquidity trap.
C) full monetary saturation.
D) a situation in which a nation must use caution, since monetary policy is "super" effective.
Ans: B) the zero lower bound situation, which means the U.S. economy may be in a liquidity trap.
Economics
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Monetizing the budget deficit
A) creates a full-employment deficit that exceeds the actual deficit. B) occurs when the Treasury sells bonds to businesses. C) helps stabilize the economy. D) leads to increases in the money supply.
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If a country had a nominal GDP of $800 million, and the GDP Deflator was 95, what is the real GDP?
a. $750 million b. $828 million c. $950 million d. $842 million
Economics