Which of the Following Is False About a Liquidity Trap

Multiple Choice

Which of the following is false about a liquidity trap situation:

A) ​Quantitative easing might be a more effective strategy to stimulate the economy than buying short term government securities.
B) ​The Fed can lower both short term and long term interest rates by using quantitative easing.
C) ​The Fed cannot easily reduce the fed funds interest rate.
D) ​Quantitative easing may be able to affect long term interest rates even when the Fed is unable to appreciably lower short term interest rates.