When the Economy Is in a Liquidity Trap, One Way

question 125

Multiple Choice

When the economy is in a liquidity trap, one way to get the economy out of a recession is to:

• A) increase taxes.
• B) increase government expenditures.
• C) contract the money supply.
• D) expand the money supply.

---

Definitions:

Short-Term

Pertaining to a time frame of typically less than a year, often used to describe loans, investments, and financial obligations.

Dividends

Financial rewards given by a company to its shareholders, predominantly coming from the company's profits.

Stock Valuation

The process of determining the intrinsic value of a company’s shares based on earnings, dividends, and other economic indicators.

Publicly Traded

A designation for companies whose shares are bought and sold on the open market through a stock exchange, allowing for broad public investment.