When the economy is in a liquidity trap, one way to get the economy out of a recession is to:
A) increase taxes.
B) increase government expenditures.
C) contract the money supply.
D) expand the money supply.

Question

Quizplus · Accepted Answer

Increasing government expenditures can stimulate demand and help the economy recover from a recession during a liquidity trap, where traditional monetary policy is ineffective.

When the Economy Is in a Liquidity Trap, One Way