The Existence of a Liquidity Trap Implies That

question 52

Multiple Choice

The existence of a liquidity trap implies that

• A) a decrease in the interest rate might not increase investment spending.
• B) an increase in the demand for money will be followed by an equal increase in the supply of money.
• C) an increase in the supply of money may not lower interest rates.
• D) a and c

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Definitions:

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