Multiple Choice
Which of the following is false about a liquidity trap situation:
A) The Fed could not appreciably raise short term interest rates.
B) If the Fed added reserves to the banking system, it would have little effect on investment.
C) Traditional monetary policy would be relatively weak in its effects on aggregate demand.
D) Expansionary monetary policy would tend to increase excess reserves in the banking system.
Correct Answer:
Verified
Correct Answer:
Verified
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