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Answer to Question #228231 in Macroeconomics for fatima
Question #228231
What is a liquidity trap? If the economy was stuck in one, would you advise the use of mon
etary or fiscal policy?
Expert's answer
Liquidity trap is a contractionary situation in the economy where interest rates are low and saving rates are high.
Monetary policy is ineffective in liquidity trap.
Learn more about our help with Assignments: Macroeconomics
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