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By late summer of 2010, the target federal funds rate was between zero and 0.25%. At the same time, animal spirits were dor

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Answer #1

Option B is correct

Monetary policy is not effective under zero lower bound because the interest rates are already near zero and businesses are dormant due to which there is no incentive to invest. In such a scenario monetary policy will have to to look for different unconventional methods such as quantitative easing and it will be less effective than fiscal expansion.

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