Which of the following will occur when an economy is faced with a liquidity trap situation?
A) A reduction in the price level will cause a rightward shift in the aggregate demand curve.
B) A reduction in the price level will cause a leftward shift in the aggregate demand curve.
C) The aggregate demand curve is now vertical.
D) The aggregate demand curve is now upward sloping.
C
You might also like to view...
The Federal Reserve System was established
A. at the request of farmers to keep down interest rates. B. because Americans believe in centralization of authority. C. after four severe bank panics between 1873 and 1907. D. as part of the Treasury Department.
A good that is rival in consumption and nonexcludable is a ______.
a. private b. public c. common d. club
Which of the following is an example of the life-cycle motive for saving?
A. Pat puts $400 per month in his 401(k) retirement account. B. Chris keeps $15,000 in a money market account to pay expenses in case he loses his job. C. Jordan sets aside $200 per month in case she has to pay for a new roof for her house. D. Gerry and Terry put $2,000,000 in a trust fund that will go to their children when they die.
Exhibit 9-2 A monopolistic competitive firm
?
If all firms in a monopolistic competitive industry have demand and cost curves like those shown in Exhibit 9-2, we would expect that in the long run:
A. all firms will leave the industry. B. some firms will leave the industry. C. firms in the industry earn zero economic profits. D. a number of new firms will enter the industry.