The liquidity trap is often compared to:
A. pulling on a string.
B. pushing on a string.
C. pushing banks into a hole filled with liquid.
D. pulling banks into a hole filled with liquid.
Answer: B
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Which of the following is a way to finance a budget deficit?
A) increased private saving B) decreased domestic investment C) decreased foreign investment D) all of the above
Private savings and thus investment could be increased by which of the following government policies, ceteris paribus?
A) elimination of the corporate income tax B) allowing corporations to use "replacement cost accounting" C) exemption of interest earnings from income taxation D) all of the above.
A stress test of banks, such as that undertaken in the Spring of 2009, is designed to:
A) ensure that banks have followed proper accounting standards B) make sure that banks are properly managed C) gauge how well banks would fare if the economy worsens D) estimate the impact of a bank panic on the overall economy
Which of the following generate an income that would be excluded from the GDP of an economy?
a. A professional working in small start-up firm b. A person selling heroin to tourists c. A person selling electronic guides to tourists d. A farmer selling oranges to a fruit seller