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johnpaul92 johnpaul92
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8 years ago
A liquidity trap occurs when
A) the Fed increases the money supply, causing the expected inflation rate to rise more than the real interest rate declines, so that the nominal interest rate increases.
B) there are runs on banks that are solvent but illiquid.
C) the demand for loans increases in a country on the gold standard, so that the monetary supply is not able to increase and interest rates rise dramatically.
D) any additions to the monetary base are held as cash by people or reserves at banks.
Textbook 
Macroeconomics

Macroeconomics


Edition: 8th
Authors:
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supamansupaman
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8 years ago
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johnpaul92 Author
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#2
8 years ago
This is incredible, wasn't expecting anyone to answer this one
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#3
8 years ago
Glad to be part of your success Wink Face
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