The Liquidity Trap Refers to the

Multiple Choice

The liquidity trap refers to the

A) assumption that the money supply curve is vertical as a result of the Fed's control.
B) problem that occurs when interest rates reach such high levels that no individuals want to hold their wealth in the form of money.
C) situation that occurs when an excess supply of money results in people holding more money than they desire.
D) possibility that interest rates drop so low that people willingly hold all the additions to the money supply,rather than use it to buy bonds.