A Traditional Liquidity Trap Is Problematic for a New Keynesian

question 54

Multiple Choice

A traditional liquidity trap is problematic for a New Keynesian policy maker because there is a

• A) strong incentive to create inflation in the long-run.
• B) positive output gap but the interest rate cannot go below zero.
• C) strong incentive to create deflation in the long-run.
• D) negative output gap but the interest rate cannot go below zero.
• E) negative output gap but the interest rate target remains too low.

Understand the evolution and types of economic systems, their implementation, and societal impacts.

Understand the roles and responsibilities in a suretyship relationship, including the rights and obligations of sureties.

Analyze the legal implications of secured transactions under Article 9 of the UCC, including the definition and value of collateral.

Identify and describe the process of contract rescission and its impact on surety obligations.

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Definitions:

Counterconditioning

A therapeutic technique aiming to change the response to a certain stimulus by associating it with a new, more desirable behavior or response.

Operant Conditioning

A learning process through which the strength of a behavior is modified by reinforcement or punishment, developed by B.F. Skinner.

B.F. Skinner

An American psychologist best known for his work in behaviorism and the development of the theory of operant conditioning.

Observable Conditions

Conditions or states that can be seen or noticed, allowing for objective measurement or assessment.