In a Liquidity Trap

question 91

Multiple Choice

In a liquidity trap:

• A) fiscal policy becomes ineffective because of the high budget deficit.
• B) monetary policy becomes ineffective because the nominal interest rate is close to the zero bound.
• C) the aggregate price level becomes downwardly sticky.
• D) any increase in government spending drives out planned investment spending.

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Definitions:

Pupil

The opening in the center of the iris of the eye through which light enters the eye.

Eyespots

Pigmented organelles found in certain algae and unicellular organisms that allow them to sense light direction and intensity, aiding in phototaxis.

Light Source

An object that emits light, providing illumination for various applications, ranging from domestic lighting to scientific research.

Light Intensity

The amount of light energy per unit of area, an important factor in the photosynthesis process and plant growth.