The Liquidity Trap

question 18

Multiple Choice

The liquidity trap

• A)Refers to the vertical portion of the money demand curve.
• B)Refers to the possibility that interest rates may not respond to changes in the money supply.
• C)Implies that people are willing to hold very limited amounts of money at low interest rates.
• D)Occurs when people wish to hold more and more money as interest rates fall.

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Definitions:

Mean

The average value of a set of numbers, calculated by dividing the sum of all numbers by the count of numbers.

Variability

The degree to which values in a dataset or statistical distribution vary from the mean or average value.

Scores

Quantitative values assigned or obtained in an assessment or test, representing the performance or achievement.

Inclusive Range

The difference between the highest and lowest values in a dataset, including both of those values.