A liquidity trap is said to exist when a change in monetary policy has no effect on
A) the money supply.
B) the natural level of employment.
C) aggregate supply.
D) interest rates.
Ans: D) interest rates.
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Which of the following statements is true?
A. Comparative advantage means that total world output will be greatest when each good is produced by the nation that has the highest domestic opportunity cost of producing it. B. Specialization will be complete among nations when opportunity costs increase as the nations produce more of a particular product. C. Specialization will be less than complete among nations when opportunity costs increase as the nations produce more of a particular product. D. Comparative advantage means that a nation can gain from trade only if it has a lower labor productivity than its trading partner.
Which criterion is NOT useful when evaluating a theory?
A) It has predictive power. B) It fits one's pre-conceived bias. C) It offers a model consistent with investor behavior. D) It explains actual data well.
When conducting an open-market sale, the Fed
a. buys government bonds, and in so doing increases the money supply. b. buys government bonds, and in so doing decreases the money supply. c. sells government bonds, and in so doing increases the money supply. d. sells government bonds, and in so doing decreases the money supply.
Which of the following is the kind of decision that can be made at the margin:
a) whether or not to hire new workers b) whether or not to go on a vacation c) whether or not to build an extra room on a home d) whether to have a dog or a cat as a pet