Author Question: A liquidity trap occurs when the a. LM curve is steep. b. LM curve is vertical. c. LM curve is ... (Read 40 times)

Davideckstein7 · **on:** Jun 30, 2018

A liquidity trap occurs when the

a. LM curve is steep.
b. LM curve is vertical.
c. LM curve is relatively flat.
d. IS curve is flat.

Question 2

When automatic fiscal stabilizers are in place, a shock that causes a fall in the level of economic activity automatically

a. results in a decline in the federal budget deficit that lessens the fall in income.
b. results in a rise in the federal deficit that lessens the fall in income.
c. requires the federal government to balance the budget.
d. will lead to a permanent increase in the budget deficit.
e. both a and b