In an economy with high unemployment, the central bank has room to decrease the interest rate. Policy makers might consider lowering interest rates if the current rate of unemployment is --------------- the. natural rate of unemployment. All of the following are factors that could hinder the effectiveness of decreasing the interest rate in the face of an unemployment rate significantly higher than the natural rate of unemployment except A). projected prolonged effect of the J-curve.B). Large diversity in econometric predictions. C). Long term rates that closely follow short term rate.D). Interest rates near zero.
All of the following are factors that could hinder the effectiveness of decreasing the interest rate in the face of an unemployment rate significantly higher than the natural rate of unemployment except
A). projected prolonged effect of the J-curve.
B). Large diversity in econometric predictions.
C). Long term rates that closely follow short term rate.
D). Interest rates near zero.
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