explain how the activities and decisions of private corporations, comercial banks and wealthy individuals all?

Question

might frustrate and foil the goals of any monetary policy stimulus program.

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Answer 1

Monetary stimulus consist of lowering the interest rate by increasing the money supply. This is supposed to increase borrowing, mostly for investment, which will increase economic activity. If private corporations, commercial banks and wealthy individuals think the return on investment will not be high enough to justify the risk, the additional funds will not be used. Japans experience in the 1990's show that even very low interest rates does not guarantee increased investment.