Which of the following is false about a liquidity trap situation:
A)Quantitative easing might be a more effective strategy to stimulate the economy than buying short term government securities.
B)The Fed can lower both short term and long term interest rates by using quantitative easing.
C)The Fed cannot easily reduce the fed funds interest rate.
D)Quantitative easing may be able to affect long term interest rates even when the Fed is unable to appreciably lower short term interest rates.

Question

Which of the following is false about a liquidity trap situation:
A)​Quantitative easing might be a more effective strategy to stimulate the economy than buying short term government securities.
B)​The Fed can lower both short term and long term interest rates by using quantitative easing.
C)​The Fed cannot easily reduce the fed funds interest rate.
D)​Quantitative easing may be able to affect long term interest rates even when the Fed is unable to appreciably lower short term interest rates.

Quizplus · Accepted Answer

The Answer of Which of the following is false about a liquidity trap situation:
A)​Quantitative easing might be a more effective strategy to stimulate the economy than buying short term government securities.
B)​The Fed can lower both short term and long term interest rates by using quantitative easing.
C)​The Fed cannot easily reduce the fed funds interest rate.
D)​Quantitative easing may be able to affect long term interest rates even when the Fed is unable to appreciably lower short term interest rates.

Which of the Following Is False About a Liquidity Trap