The situation ‘Liquidity trap’ refers to - 28514

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Rakesh Yadav • 4.99K Points
Extraordinary Economic

Q. The situation ‘Liquidity trap’ refers to

(A) Because of price rate declination people wish to hold only cash

(B) People want to hold only cash because there is too much of liquidity in the economy

(C) The rate of interest is so low that no one wants to hold interest bearing assets and people wants to hold cash

(D) There is an excess of foreign exchange reserves in the economy leading to excess of money supply

Correct Answer - Option(C)

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