Which of the following is true 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. Quantitative easing may be able to affect long term interest rates even when the Fed is unable to appreciably lower short term interest rates.
c. The Fed cannot easily reduce the fed funds interest rate.
d. All of the above are true.
d
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A hard peg may be achieved by all of the following except
A) following the rules of the Bretton Woods Agreement. B) dollarization. C) establishing a currency board. D) mutual agreements establishing a common currency.
The logic of the exchange-rate effect begins with a change in the price level changing the interest rate
a. True b. False Indicate whether the statement is true or false