An Economy Is Said to Be in the Liquidity Trap

question 14

Multiple Choice

An economy is said to be in the liquidity trap when the short-term ________ is down to zero.

• A)real interest rate on corporate bonds
• B)nominal interest rate on government bonds
• C)nominal interest rate on corporate bonds
• D)real interest rate on government bonds

---

Definitions:

Algorithm

A precise step-by-step plan for solving a problem or accomplishing a task, often used in computing to develop software or process data.

Verbal Protocols

A research method in which participants verbalize their thoughts as they perform a task, used to gather data on cognitive processes.

Maintenance Rehearsal

A cognitive process that involves repeatedly verbalizing or thinking about a piece of information to keep it in working memory longer.

Elaborative Rehearsal

A memory technique that involves thinking about the meaning of the information to be remembered or making connections between that information and known information.