Which of the Following Is False?​

question 52

Multiple Choice

Which of the following is false?​

• A)​In a liquidity trap, expansionary monetary policy will tend to increase the excess reserves in the banking system.
• B)​If there are currently excess reserves in the banking system, in a liquidity trap, expansionary monetary policy will lead those excess reserves to be lent out by the banking system
• C)​If there are no changes in the level of excess reserves held in the banking system as a result, both expansionary and contractionary monetary policy can successfully shift the money supply curve
• D)​None of the above; all of the above are true.

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Definitions:

Call Option Contracts

Financial derivatives that give the buyer the right, but not the obligation, to buy a stock or another financial asset at a specified price within a specific time frame.

Intrinsic Value

The actual, inherent worth of an asset or investment, determined through fundamental analysis without regard to market value.

Strike Price

The predetermined price at which the holder of an option has the right to buy (in the case of a call option) or sell (in the case of a put option) the underlying security or commodity.

Put Option

This is a financial contract that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.