When the economy is in the liquidity trap, the
A) LM curve is horizontal.
B) LM curve is vertical.
C) IS curve is horizontal.
D) IS curve is vertical.
A
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Changes in the money supply growth rate
A) are neutral in the short run. B) need not be neutral in the short run. C) are neutral in the long run. D) need not be neutral in the long run. E) affect the real output of the economy.
Most economists have argued that the persistence of high unemployment despite New Deal policies:
a. constitutes a complete repudiation of New Deal policies. b. was the result of "sticky" wages. c. was in part the result of pressures from government to maintain wages. d. Both b and c are correct.
Typically, the unemployment rate ________ during a recession and ________ during an expansion.
A. rises; does not change B. rises; falls C. rises; rises even more D. falls; rises
Explain why the price elasticity varies even when a firm faces a linear demand curve.
What will be an ideal response?