Multiple Choice
Which of the following will occur when an economy is faced with a liquidity trap situation?
A) A decrease in the price level will cause a leftward shift in the aggregate demand curve.
B) A decrease in the price level will cause a rightward shift in the aggregate demand curve.
C) A decrease in the price level will cause a movement along the aggregate demand curve.
D) The aggregate demand curve is now horizontal.
E) The aggregate demand curve is now upward sloping.
Correct Answer:
Verified
Correct Answer:
Verified
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