The zero lower bound refers to:
A) the fact that the reserve requirement must always be greater than zero.
B) the Federal Reserve's inability to push the nominal interest rate below zero.
C) the Federal Reserve's goal of maintaining full employment.
D) None of these describe the zero lower bound.

Question

Quizplus · Accepted Answer

The zero lower bound refers to the Federal Reserve's inability to push the nominal interest rate below zero. This can limit the effectiveness of monetary policy during times of economic recession or other periods of low inflation.

The Zero Lower Bound Refers To