Multiple Choice
In a liquidity trap caused by deficient financial liquidity,if the central bank increases the interest rate it charges on reserves,
A) aggregate demand shifts right and output increases.
B) aggregate supply shifts right and output increases.
C) aggregate demand shifts right, aggregate supply shifts left and output is constant.
D) aggregate demand shifts left and output decreases.
E) aggregate supply shifts left and output decreases.
Correct Answer:
Verified
Correct Answer:
Verified
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