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Recall Application 1, "Avoiding a Liquidity Trap," to Answer the Following

Question 71

Multiple Choice

Recall Application 1, "Avoiding a Liquidity Trap," to answer the following questions:
-What was the policy adopted by the Fed in response to the looming liquidity trap?


A) Do nothing and wait for interest rates to rise.
B) Increase the money supply.
C) Pay interest on bank reserves.
D) Increase the reserve requirement.

Correct Answer:

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