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Q. |
'Liquidity trap' is a situation in which: |
A. | people want to hold only cash because prices are falling everyday |
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 foregin exchange reserves in the economy leading to excess of money supply |
Answer» C. the rate of interest is so low that no one wants to hold interest bearing assets and people wants to hold cash |
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