A liquidity trap occurs when:
A) a bank is short of reserves and must stop making new loans.
B) the money multiplier falls enough to offset the effect of increases in reserves.
C) the Fed buys reserves from banks, driving up the interest rate.
D) the interest rate is below the inflation rate.
Correct Answer:
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Q95: If the Fed increases the required reserves,
Q96: If there are significant excess reserves, a
Q97: Suppose the reserve requirement is 5 percent.
Q98: The situation in which the central bank
Q99: The Federal Open Market Committee:
A)makes decisions that
Q101: If the Fed simultaneously raises the discount
Q102: The federal funds rate is the interest
Q103: The discount rate refers to the:
A)lower price
Q104: What tool of monetary policy would the
Q105: When the Fed sells bonds, the:
A)federal funds
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