In the liquidity trap, monetary policy
A) has a large impact on interest rates.
B) has a small impact on interest rates.
C) has no impact on interest rates.
D) has a proportionate impact on interest rates.
C
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Suppose there are two economies that are identical in every way with the following exception. Economy A has an unemployment compensation system while economy B does NOT have an unemployment compensation system
Now suppose both economies experience the same drop in planned investment. Which of the following is correct? A) Real GDP will fall more in economy A than in economy B. B) Real GDP will fall more in economy B than in economy A. C) Real GDP will fall the same in both economies. D) The effect on the relative size of the reduction in real GDP in the two economies is ambiguous.
If a country can produce cars with a lower opportunity cost than its trading partners, then it must have a:
A. Low market price for cars. B. Comparative advantage in cars. C. A trade deficit. D. A trade surplus.
The perfect competitor's demand curve is
A. perfectly elastic. B. perfectly inelastic. C. highly elastic. D. highly inelastic.
Other things being equal, an expansion of commercial bank lending:
A. is desirable during a period of demand-pull inflation. B. increases the money supply. C. reduces the money supply. D. changes the composition, but not the size, of the money supply.