Which of the Following Will Occur When an Economy Is

question 46

Multiple Choice

Which of the following will occur when an economy is faced with a liquidity trap situation?

• A) A decrease in the price level will cause a leftward shift in the aggregate demand curve.
• B) A decrease in the price level will cause a rightward shift in the aggregate demand curve.
• C) A decrease in the price level will cause a movement along the aggregate demand curve.
• D) The aggregate demand curve is now horizontal.
• E) The aggregate demand curve is now upward sloping.

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