A Liquidity Trap Occurs When ________

question 87

Multiple Choice

A liquidity trap occurs when ________.

• A) the central bank cannot lower policy rates below zero
• B) government spending crowds out private investment
• C) planned investment equals zero
• D) money is no longer considered a liquid asset

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Definitions:

Behavior Therapy

A type of psychotherapy that focuses on changing undesirable behaviors through conditioning and learning techniques.

Transference

In psychoanalysis, the process by which patients displace onto their analysts feelings and ideas which derive from previous figures in their lives.

Psychodynamic Therapy

A therapeutic approach that emphasizes unconscious processes and past experiences in shaping current behavior and feelings.

Counterconditioning

A behavior therapy procedure that uses classical conditioning to evoke new responses to stimuli that are triggering unwanted behaviors.