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.
a
You might also like to view...
In reality, prices of non-renewable resources have not increased continually according to the model developed in Section 16.3 because of
A) abundance of the resource. B) technological progress changing marginal cost. C) changing market power of producers. D) All of the above.
If, under a fixed exchange rate system, the dollar price of a Mexican peso is below its equilibrium level, then the
A) dollar is overvalued. B) peso is overvalued. C) dollar has depreciated. D) peso has appreciated.