The Liquidity Trap

question 18

Multiple Choice

The liquidity trap

• A)Refers to the vertical portion of the money demand curve.
• B)Refers to the possibility that interest rates may not respond to changes in the money supply.
• C)Implies that people are willing to hold very limited amounts of money at low interest rates.
• D)Occurs when people wish to hold more and more money as interest rates fall.

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