Evidence Suggests That a Liquidity Trap Is Possible When

question 85

Multiple Choice

Evidence suggests that a liquidity trap is possible when

• A)real interest rates are at zero.
• B)real interest rates are at or just above zero.
• C)nominal interest rates are at zero.
• D)nominal interest rates are at or just above zero.

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Definitions:

Sedimentary

relating to rock that has formed from sediment deposited by water, wind, or ice.

Igneous

Refers to rocks or minerals that solidified from molten or partly molten material, indicative of volcanic processes.

Sediment

Grains and other fragments that originate from the weathering and transport of rocks, and the unconsolidated deposits that result from the deposition of this material.

Transported

Refers to materials that have been moved from their original location to a new place by natural processes such as erosion or glaciation.