In a liquidity trap,the
A)IS curve is vertical.
B)IS curve is horizontal.
C)LM curve is vertical.
D)LM curve is horizontal.

Name: In a liquidity trap,the A)IS curve is vertical. B)IS curve is horizontal. C)LM curve is vertical. D)LM curve is horizontal.
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Question

Quizplus · Accepted Answer

In a liquidity trap, the LM curve is horizontal because interest rates are at or near zero, and changes in the money supply do not affect interest rates or output.

In a Liquidity Trap,the