Description of this paper

If the monetary authority wants to stimulate an economy

Description

solution


Question

a. If the monetary authority wants to stimulate an economy in a recession, it often reduces interest rates, and if the inflation rate is low, as it has been in the early part of the current decade, these interest rates can become very low. How effective is this monetary policy if the demand for loans is shrinking, even at a very low interest rate? Why would demand for loans decline if interest rates are declining?

 

Paper#27950 | Written in 18-Jul-2015

Price : $22
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