Economics 15th Edition by James Gwartney,Richard Stroup,Russell Sobel,David Macpherson

Exercise 14

What impact did the near zero interest rates of 2009-2012 have on the incentive of people to hold money balances? How did the low interest rates affect the wealth of people who had savings deposits, money market mutual funds, and CDs as their primary instruments of savings? What impact would these two factors have on the expansionary effects of the Fed's monetary policy? Explain.