If an economy is in a liquidity trap, then the nominal interest rate is ________ and the only effective policy that can be used to stimulate the economy is ________

A) zero or negative; expansionary fiscal policy
B) zero or negative; expansionary monetary policy
C) high and rising; contractionary monetary policy
D) high and rising; expansionary monetary policy
E) high and rising; expansionary fiscal policy


A

Economics

You might also like to view...

Sarah initially used her cell phone mostly to make important business calls

However, when she was informed that henceforth her phone bills would be reimbursed by her employer, she started using her cell phone to make frequent calls to her friends and relatives. This behavior is an example of ________. A) moral hazard B) a negative externality C) the prisoners' dilemma D) the free-rider problem

Economics

Based on the above figure of the costs at Barney's Bagel Bakery, at which of the following levels of output does the marginal product of labor equal the average product of labor?

A) at 500 bagels B) at 2000 bagels C) at 3000 bagels D) None of the above because the marginal and average products of labor can never be equal.

Economics

The long-run aggregate supply curve shows the relationship between the ________ and ________

A) price level; quantity of real GDP supplied B) real interest rate; quantity of real GDP supplied C) inflation rate; quantity of real GDP demanded D) nominal interest rate; quantity of real GDP supplied

Economics

A firm produces leather handbags and leather shoes. If there are economies of scope, the product transformation curve between handbags and shoes will be

A) a straight line. B) bowed outward (concave). C) bowed inward (convex). D) a rectangle.

Economics