Economists who are skeptical about the relevance of "liquidity traps" argue that
a. a central bank continues to have tools to stimulate the economy, even after its interest rate target hits its lower bound of zero.
b. a central bank continues to have the option of committing itself to future monetary contraction, even after its interest rate target hits its lower bound of zero.
c. a central bank can greatly reduce the likelihood of a liquidity trap by setting the target rate of inflation at zero.
d. while the concept of a liquidity trap is theoretically possible, nothing resembling a liquidity trap ever has been observed in the real world.
a
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When demand changes and the demand curve shifts, equilibrium price and equilibrium quantity change in the same direction
Indicate whether the statement is true or false
If the dollar's value changes from 120 yen per dollar to 110 yen per dollar, the dollar has
A) depreciated. B) appreciated. C) demanded. D) devalued.
In the early 2000s, banks lowered lending standards to comply with the Community Reinvestment Act
Indicate whether the statement is true or false
If the production of a good generates a negative externality, then at the market equilibrium quantity, the marginal cost to society of another unit of the good will be:
A. less than the marginal benefit of another unit. B. greater than the marginal benefit of another unit. C. negative due to the external cost. D. equal to the marginal benefit of another unit.