Monetary policy is difficult when interest rates are low. For example, in the early 2000s the Bank
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Monetary policy is difficult when interest rates are low. For example, in the early 2000s the Bank of Japan lowered the interest rate to 0.01 percent with little effect on investment.
a. Why is it difficult for monetary policy to be effective when interest rates are very low?
b. How might institutions be changed to make monetary policy effective under these circumstances? (Institutionalist)
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a When interest rates are very low it is unlikely that they will ...View the full answer
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