The zero interest rate policy (ZIRP) presented a policy problem when the economy remained weak, and that problem is known as the
zero bound problem.

Question

Quizplus · Accepted Answer

The statement is correct, ZIRP led to the zero bound problem when the economy remained weak. The zero bound problem refers to the challenge central banks face when they want to stimulate the economy through monetary policy but have already reduced interest rates to zero, leaving them with limited options.

The Zero Interest Rate Policy (ZIRP) Presented a Policy Problem