If the money market is in the liquidity trap,it is operating in the __________ segment of the __________ demand curve.
A) vertical; investment
B) vertical; money
C) horizontal; investment
D) horizontal; money

Question

Quizplus · Accepted Answer

In a liquidity trap, the demand curve for money becomes horizontal because interest rates are already very low and cannot decrease further. This means that the market is in the horizontal segment of the money demand curve.

If the Money Market Is in the Liquidity Trap,it Is