Economists Who Are Skeptical About the Relevance of "Liquidity Traps

question 175

Multiple Choice

Economists who are skeptical about the relevance of "liquidity traps" argue that

• A)a central bank continues to have tools to stimulate the economy, even after its interest rate target hits its lower bound of zero.
• B)a central bank continues to have the option of committing itself to future monetary contraction, even after its interest rate target hits its lower bound of zero.
• C)a central bank can greatly reduce the likelihood of a liquidity trap by setting the target rate of inflation at zero.
• D)while the concept of a liquidity trap is theoretically possible, nothing resembling a liquidity trap ever has been observed in the real world.

---

Definitions:

Health Performance

A measurement of how well an individual or population is achieving specific health outcomes.

Work Stress

The physical and emotional strain or tension experienced as a result of job demands, challenges, or pressures.

Manifest

To display or exhibit a quality, feeling, or characteristic openly; in logistics, it also refers to a comprehensive list of cargo on a ship, plane, truck, or train.

Stress

is a physical, mental, or emotional strain or tension resulting from adverse or demanding circumstances.