In a Liquidity Trap,monetary Policy Has ________ Effect on Aggregate

question 34

Multiple Choice

In a liquidity trap,monetary policy has ________ effect on aggregate spending because a change in the money supply has ________ effect on interest rates.

• A)no;no
• B)no;a large
• C)no;a small
• D)a large;a large

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Definitions:

Liquidated Debt

A debt for which the exact monetary value has been determined and acknowledged by both the debtor and the creditor.

Accord and Satisfaction

A legal settlement where a disputing party agrees to accept a payment or performance that is different from what was originally owed or expected, thereby settling the claim.

Preexisting Duty

An obligation that one party already legally owes to another under a contract, which cannot serve as consideration for a new contract.

Illusory Consideration

A promise or apparent agreement that lacks the actual commitment or substance to be legally enforceable as consideration in a contract.