If a liquidity trap exists, people are likely to be thinking that
A) bond prices are so low that they have nowhere to go but up; given this, now is a good time to be holding bonds.
B) bond prices are so high that they have nowhere to go but down; given this, it is better not to be holding bonds.
C) bond prices will soon rise so it is better to get out of bonds now.
D) interest rates will soon fall.
B
You might also like to view...
The income elasticity of demand for haircuts is 1.5, and the income elas-ticity of demand for food is 0.14 . You take a weekend job, and the income you have to spend on food and haircuts doubles
If the prices of food and haircuts remain the same, will you double your expenditure on haircuts and double your expenditure on food? Explain why or why not.
Diseconomies of scale at the firm level occur
a. wherever the firm's long-run average cost curve is horizontal b. wherever the firm's long-run total cost curve is horizontal c. where marginal cost equals marginal revenue d. if a firm becomes "too large" e. if any of the firm's plants becomes "too large"
A firm's production process shows constant returns to scale. It can produce 5,000 widgets at a total cost of $2,500 and 10,000 widgets at an average cost of
a. $10,000. b. $5,000. c. $2,000. d. $0.50.
Each of the following is an example of capital, except
A. an office building. B. gold. C. an assembly line. D. a computer system.