If the economy is currently in a liquidity trap, an increase in the money supply

Question

If the economy is currently in a liquidity trap, an increase in the money supply would shift the MS curve ___________ and interest rates would ____________

. A. right; decrease

B. right; not change

C. right; double

D. right;

increase Sticky wages is used to explain why the

A. Investment curve is vertical

B. Aggregate demand curve is downward sloping

C. Short run aggregate supply curve is upward sloping

D. Long run aggregate supply curve is vertical

All of the following would cause a decrease in aggregate demand except

A. household wealth falls

B. dollar depreciates relative to foreign currencies

C. decrease in the interest rate

D. decrease in business taxes

Explanation / Answer

D. Decrease in business taxes doesn't have a direct impact on aggregate demand.

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