The evidence on the interest sensitivity of the demand for money suggests that the demand for money is ________ to interest rates,and there is ________ evidence that a liquidity trap exists.
A)sensitive;substantial
B)sensitive;little
C)insensitive;substantial
D)insensitive;little

Question

Quizplus · Accepted Answer

The evidence suggests that the demand for money is sensitive to interest rates, as stated in the first part of the statement. However, there is little evidence to suggest that a liquidity trap exists, which rules out choices A and C. Therefore, the best answer is B.

The Evidence on the Interest Sensitivity of the Demand for Money