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.

---

Definitions:

Monthly Interest Rate

The interest rate charged or earned, expressed on a monthly basis, typically used for loans or investments.

Monthly Interest Rate

It's the interest rate applied each month on loans, savings, or investments, calculated by dividing the annual interest rate by 12.