The Phenomenon That Interest Rates May Be So Low That

question 172

Multiple Choice

The phenomenon that interest rates may be so low that increases in the money supply will have no impact on aggregate demand is called

• A) the liquidity trap.
• B) the horizontality of demand.
• C) the sterilization of money.
• D) monetary incapacitation.

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Definitions:

Inventory

The complete quantity of products and supplies kept in inventory by a company, aimed for either sale or manufacturing activities.

Depreciation

Depreciation is the allocation of the cost of a tangible asset over its service life, reflecting the decrease in value due to wear and tear, age, or obsolescence.

Net Investment

The difference between total investment in new physical assets and depreciation on existing assets, indicating the net increase in the capital stock of an economy.

Economy

A system of production, distribution, and consumption of goods and services within a region or country.