A Liquidity Trap Exists When a Change in the Money

question 56

True/False

A liquidity trap exists when a change in the money supply immediately and drastically affects interest rates.

---

Definitions:

Goodwill

A non-tangible asset formed during the acquisition of a company for a sum greater than the fair value of its net assets that can be identified.

Equity Method

An accounting technique used to record investments in other companies, where the investment is shown as an asset and changes in the investment's value are reflected in profits or losses.

Goodwill

An intangible asset that represents the excess of the purchase price over the fair market value of acquired net assets during a business acquisition.

Initial Value Method

An accounting approach where investments are recorded at their purchase cost without adjustment for changes in market value.