Monetarists emphasize
A)crowding-out but not the liquidity trap.
B)crowding-out and the liquidity trap.
C)the liquidity trap but not crowding-out.
D)neither crowding-out nor the liquidity trap.

Question

Quizplus · Accepted Answer

Monetarists emphasize crowding-out, which is the idea that increased government borrowing can lead to higher interest rates and reduced investment spending by the private sector. They generally do not focus on the liquidity trap, which is a situation where monetary policy becomes ineffective because the nominal interest rate is at or near zero.

Monetarists Emphasize