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.

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Definitions:

External Consequences

Outcomes or reactions stemming from an individual's actions that occur outside of the individual, affecting their environment or other people.

Skinner

B.F. Skinner, an American psychologist and behaviorist, known for his work in the development of the theory of operant conditioning.

Cognitive Psychologists

Cognitive psychologists study mental processes including perception, thinking, memory, and judgment, focusing on how people understand, diagnose, and solve problems.

Decision Making

The method of selecting options through recognizing a decision to be made, collecting data, and evaluating different solutions.