A liquidity trap occurs when the a. LM curve is steep. b. LM ...

[Davideckstein7]

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

[chinwesucks]

Answer to Question 1

C

Answer to Question 2

B

[Davideckstein7]

Great answer, keep it coming

[juliaf]

Excellent