If a Liquidity Trap Exists,people Are Likely to Be Thinking

question 117

Multiple Choice

If a liquidity trap exists,people are likely to be thinking that

• A) bond prices are so low that they have nowhere to go but up; given this,now is a good time to be holding bonds.
• B) bond prices are so high that they have nowhere to go but down; given this,it is better not to be holding bonds.
• C) bond prices will soon rise so it is better to get out of bonds now.
• D) interest rates will soon fall.

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Definitions:

Corporation's Affairs

The various activities, decisions, and policies related to the management and operation of a corporation.

Stockholders' Equity

The remaining interest in a company's assets after all liabilities have been subtracted, symbolizing ownership stake.

Bylaws

Regulations, rules, or laws adopted by an association or corporation to govern its actions and affairs.

Public Corporation

A Public Corporation is a company that has issued securities through an initial public offering and is traded on at least one stock exchange or in the over-the-counter market.