An interest rate spread is the difference between an interest rate on a risky asset and the corresponding interest rate on a risk-free treasury security.

If a country's nominal interest rate is zero, then

A) the country's economy is in a liquidity trap. B) exchange rates with other countries are likely to decline. C) exchange rates with other countries are likely to increase. D) monetary policy is likely to be very effective in stimulating the economy. E) the country's economy has achieved monetary equilibrium.

When the percentage change in price is greater than the corresponding change in quantity demanded, demand is inelastic

Indicate whether the statement is true or false