For a country suffering from "liquidity trap", its government is unable to use standard monetary policy to boost borrowing and spending to move the economy toward its potential real product.

Question

Quizplus · Accepted Answer

In a liquidity trap, interest rates are already very low and cannot be lowered further to stimulate borrowing and spending. Therefore, the government is unable to use standard monetary policy to boost the economy.

For a Country Suffering from "Liquidity Trap", Its Government Is