Which of the following best explains monetary policies used by the Bank of Japan

Question

Which of the following best explains monetary policies used by the Bank of Japan during the Japanese Slump and their effectiveness?

The Bank of Japan lowered the nominal interest rate very close to zero, but the real interest rate remained positive because of deflation. The Bank of Japan should have lowered the nominal interest rate below zero. The Bank of Japan worried about the rise of the Nikkei and had tried to decrease stock prices by increasing the interest rate, which significantly slowed down the slump. Monetary policy was used too late and when it was eventually used, it faced the twin problems of the liquidity trap and deflation. Although Japan went into a liquidity trap, with a nominal interest rate very close to zero, monetary policies were very effective in shifting the LM curve out.

Explanation / Answer

C seems to be the correct answer.

I can provide some references but they are of a more advanced reading.

For example, consider http://www.esri.go.jp/jp/workshop/050914/050914Svensson.pdf

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