A liquidity trap exists when a change in the money supply immediately and drastically affects interest rates.

What is Y - C equal to?

A) S B) S + T C) I + G D) T

Here are three possible definitions of "Compensating Variation": I. the amount a person would be willing to pay to avoid a price increase. II. the amount of additional income needed to allow a person to restore his or her utility back to its initial level after it has been reduced by a price increase. III. the amount of income that a person who experienced a price increase would be willing to pay

to see the price return to its earlier level. Which of these definitions is (are) correct? a. Only I b. I and II c. II and III d. Only III