In a deleveraging economy, value of collateral drops, banks are squeezed and interest rates soon hit
Question
Solution 1
the zero lower bound. This is because as the value of collateral drops, banks are less able to lend out money. This reduces the overall money supply in the economy, leading to a decrease in demand. As demand decreases, so do prices, leading to deflation. In an attempt to stimulate the economy and co Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study prob
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Decreasing interest rates tend toGroup of answer choicesIncrease aggregate demandAll options are correctLower inflationCause unemployment