Which of the Following Is NOT Consistent with the Keynesian

question 70

Multiple Choice

Which of the following is NOT consistent with the Keynesian view of policy and a liquidity trap?

• A) Monetary stimulus is not effective when interest rates are near zero.
• B) Liquidity traps require a policy solution that is opposite to the one that would be used in other situations.
• C) Monetary policy affects aggregate demand through its impact on interest rates.
• D) Fiscal policy is more effective than monetary policy in addressing a liquidity trap.

---

Definitions:

Investments

Assets or items that an individual or entity purchases with the expectation that it will generate income or appreciate in value over time.

Moral Hazard

The risk that a party insulated from risk may behave differently than if they were fully exposed to the risk.

Underpricing

Underpricing refers to setting the initial sales price of a new product or service below market value, often used to attract customers quickly.