Keynesians argued that monetary policy would NOT be effective if:
A) there was a liquidity trap.
B) the Bank of Canada was independent of political pressure.
C) other countries did not follow monetary policy similar to that of Canada.
D) no one bought bonds when the Bank of Canada conducted open-market operations.

Question

Quizplus · Accepted Answer

Keynesians argue that in a liquidity trap, where interest rates are already very low and there is still little demand for borrowing, further decreases in interest rates from monetary policy will not stimulate economic activity.

Keynesians Argued That Monetary Policy Would NOT Be Effective If