An economy is experiencing a prolonged period of high unemployment and near-zero inflation. The central bank has already reduced its primary policy interest rate to 0%, but economic activity remains stagnant. In this situation, which of the following pairs of actions represents the two main alternative categories of policy available to stimulate the economy?

Policy Recommendation for a Stagnant Economy

An economy is in a deep recession, and the central bank has already lowered its main interest rate to zero, with little effect. Match the following policy responses to the institution that would be responsible for implementing them.

Rationale for Fiscal Stimulus at the Zero Lower Bound