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If an economy is in a liquidity trap, then the nominal interest rate is ________ and the only effect

Chako

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9 years ago

If an economy is in a liquidity trap, then the nominal interest rate is ________ and the only effect

If an economy is in a liquidity trap, then the nominal interest rate is ________ and the only effective policy that can be used to stimulate the economy is ________.
A) zero or negative; expansionary monetary policy
B) high and rising; contractionary monetary policy
C) high and rising; expansionary monetary policy
D) zero or negative; expansionary fiscal policy
E) high and rising; expansionary fiscal policy

Textbook

International Economics: Theory and Policy

Edition: 10^th

Author: Krugman

Read 138 times

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Chako Author

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9 years ago

Good answer, thank you

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machukian

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9 years ago

Thanks for the feedback, I'm sure others will appreciate it too

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