When a liquidity trap situation exists, the most appropriate policy to increase output would be
A) a central bank sale of bonds.
B) an increase in government spending.
C) a central bank purchase of bonds.
D) none of the above
B
You might also like to view...
In the liquidity trap, the money demand curve
A) is horizontal. B) is vertical. C) is negatively sloped. D) is positively sloped.
If a nation imposes a tariff on imports, the portion of the tax paid by citizens depends upon
A. elasticity of demand. B. elasticity of supply. C. how important the good is. D. income elasticity. E. cross elasticity of demand with domestic products.
New residential housing is placed under consumer expenditures in aggregate demand.
Answer the following statement true (T) or false (F)
The Hatfields and the McCoys both earn $50,000 per year in real terms in the labor market, and both families are able to earn a 5 percent real interest rate on their savings. In the year 2010, both families began to save. The Hatfields saved 8 percent of their income each year; the McCoys saved 10 percent. In 2010, the Hatfields consumed ________ more than the McCoys; in 2011, the Hatfields consumed ________ than the McCoys.
A. $2,000; about $960 less B. $1,000; about $960 less C. $1,000; about $960 more D. $2,000; about $960 more