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Theory suggests negative interest rates will boost the economy by encouraging more risk taking from banks and consumers which takes the form of borrowing and

Theory suggests negative interest rates will boost the economy by encouraging more risk taking from banks and consumers which takes the form of borrowing and loaning money.

a) Use the IS-LM model to explain why regular monetary policy fails in the presence of zero lower bounds.

b) How does negative interest rate policy help bring an economy out of recession?

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