The real interest rate has a lower bound at approximately zero because The premise is false. Real interest rates do not have a lower bound of approximately zero. No one would lend money if the real rate of return was expected to be negative. 0 No one would lend money if the nominal rate of return was expected to be negative. Nominal interest rates adjust to ination expectations One feature that distinguishes Real Business Cycle theory from many other theories of the business cycle is that the role of ________ is not considered important. 0 Money ' Rational expectations ' " Consumers ' Utility maximization Dynamic stochastic general equilibrium models, which recognize that all components of an economy are interrelated, and that expectations of the future have an impact on current decisions have been Adopted by a wide spectrum of economists, including RBC and Keynesians 0 Used almost exclusively by RBC theorists ' Used almost exclusively by Keynesians Are too complex to be have an impact on policy decisions Neo-Malthusians such as Paul Ehrlich have 0 Continued to predict that population growth and overconsumption will soon lead to resource depletion and widespread global poverty and been proved wrong by events as global povery has declined. ' Continued to predict that population growth and overconsumption will soon lead to resource depletion and widespread global poverty and been proved right by increases in global poverty. ' b. Predicted more frequent recessions due to instability in the nancial system. Forecasted high growth rates of GDP per capita, and been proved right as the majority of people no longer experience scarcity. The law of demand applies to 0 All of these ' clean air clean water clean streets ' the maintenance of endangered species