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Explain What Is Meant by the Liquidity Trap

question 7

Essay

Explain what is meant by the liquidity trap.Also discuss the implications of a liquidity trap for the shapes of the money demand and LM curves.


Definitions:

Engagement

Engagement is a formal agreement between two people to get married, or the period between the proposal and the wedding.

Future In-Laws

The parents of one's fiancé(e) or the parents of one's child's spouse, who are likely to become part of one's extended family through marriage.

Better Acquainted

The process of getting to know someone or something more thoroughly.

Passive-Congenial Marriage

The partners have little emotional investment in the marriage and few expectations of each other.

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