In a Liquidity Trap

question 114

Multiple Choice

In a liquidity trap:

• A) using expansionary monetary policy is not effective because the real interest rate is negative.
• B) aggregate demand falls because consumers do not have enough liquidity to consume.
• C) using expansionary monetary policy is not effective because the nominal interest rate is irreducible.
• D) lenders are trapped by large loans with declining rates of return.

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Definitions:

Budgeted Costs

Estimated expenses planned for a set period of time, forming the basis of a budget for managing a business's or project's financial resources.

Materials Price Standard

Pre-determined cost at which materials should be bought, used for budgeting and assessing purchasing performance.

Purchasing Department

A specialized division within a company responsible for acquiring goods and services that the company needs to operate.

Overhead Variance

The difference between the actual overhead costs incurred and the overhead costs applied to products or services.