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Explain the challenges policymakers face when interest rates are very low.
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- What makes it so difficult to correctly forecast interest rate changes?Can real interest rates be negative ? Give a simple exampleWhat is meant by the real risk-free rate of interest? Seleccione una: a. The nominal risk-free interest rate, less the expected inflation. b. The rate actually used in the market, not in textbooks. c. The rate quoted on short-term Treasury bills. d. The opportunity cost of foregoing consumption, representing the rate that must be offered to individuals to persuade them to save rather than consume.
- When does the present economy studies do or use? a. When interest rate is not given b. When time is not given c. When time is not given but interest rate is given d. When time is given but interest rate is not givenInterest rate risk is the potential for investment ( ) that result from a change in interest rates. If interest rates ( ) , for instance, the value of a bond or fixed-income instrument will decline.Discuss how banks benefit when interest rates decrease?