When the Economy Is in a Liquidity Trap with a Zero

Multiple Choice

When the economy is in a liquidity trap with a zero interest rate:

A) the central bank is unable to lower interest rates in response to falling prices.
B) the central bank is unable to raise interest rates in response to rising prices.
C) the central bank abandons monetary policy altogether.
D) the central bank is unable to raise interest rates in response to falling prices.
E) the central bank is unable to lower interest rates in response to rising prices.