Question #71
Japan was able to keep interest rates at zero for 15 or more years because
- the economy was in such bad shape that there was no demand for funds and so lenders had to take low returns.
- the Bank of Japan did not issue enough bonds to fully drain the reserves added by the large daily fiscal deficits.
- the Bank of Japan were convinced that inflation was under control.
Answer #672
Answer: the Bank of Japan did not issue enough bonds to fully drain the reserves added by the large daily fiscal deficits.
Explanation
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