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Questions and Answers
What can cause the economy to over or underreact to central bank policies?
What happens to bond prices when interest rates rise?
What is a liquidity trap characterized by?
What can make an expansionary monetary policy ineffective?
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What is the role of bond market vigilantes?
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What is a limitation of monetary policy according to the text?
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Why do consumers choose to avoid purchasing treasury securities in a liquidity trap?
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What can central banks not control according to the text?
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What is the result of bond market vigilantes reducing their demand for long-term bonds?
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Why might an expansionary monetary policy not always work?
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