A Liquidity Trap Refers to a Situation in Which

question 237

Multiple Choice

A liquidity trap refers to a situation in which:

• A)taking away liquidity from the banks has a major positive effect on lending.
• B)adding liquidity to banks has major positive effects on lending.
• C)adding liquidity to banks has little or no positive effects on lending.
• D)taking away liquidity to banks has a major negative effect on lending.

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Definitions:

Contribution Margin

The excess of sales over variable costs; the excess of manufacturing margin over variable selling and administrative expenses.

Bottleneck Hour

A term used in production and manufacturing to describe the hour or period where the flow of processes slows down due to a limitation in output capabilities, impacting overall productivity.

Bottleneck

A point of congestion in a production system that occurs when workloads arrive too quickly for the production process to handle.

Fixed Capacity

The maximum output that a facility can produce in a given period under normal circumstances, without changing the physical setup.