A Liquidity Trap Occurs When

question 85

Multiple Choice

A liquidity trap occurs when

• A)any additions to the monetary base are held as cash by people or reserves at banks.
• B)the Fed increases the money supply, causing the expected inflation rate to rise more than the real interest rate declines, so that the nominal interest rate increases.
• C)there are runs on banks that are solvent but illiquid.
• D)the demand for loans increases in a country on the gold standard, so that the monetary supply is not able to increase and interest rates rise dramatically.

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Definitions:

Single X

Single X refers to the presence of a single X chromosome in humans, typically denoting Turner syndrome in females, where there is a missing or partially missing X chromosome.

Turner Syndrome

A genetic disorder in females characterized by the partial or complete absence of one X chromosome, leading to various developmental and physical abnormalities.

Menstruate

Refers to the regular, cyclic discharge of blood and mucosal tissue from the inner lining of the uterus through the vagina, part of the female reproductive cycle.

PKU

A genetic disorder known as phenylketonuria, characterized by a deficiency in the enzyme required to metabolize the amino acid phenylalanine, leading to intellectual disability if untreated.