1. Economists generally agree that the target rate of inflation should be:
A. something over 3 percent, but less than 6 percent.
B. above zero percent because of the possibility of deflation.
C. less than zero percent.
D. between 7 percent and 9 percent.
2. The fact that investors can always hold cash creates:
A. a problem for monetary policymakers when the short-term interest rates approach zero.
B. an upward bound on nominal interest rates.
C. negative nominal interest rates.
D. an opportunity for the U.S. treasury to issue bonds that actually have negative nominal interest rates.