Q.

Liquidity trap is a situation when,

A. all potential investors expect the rate of interest to rise in future
B. all potential investors expect the rate of interest to fall in future
C. natural rate of interest is above the critical rate of interest
D. demand for money for speculative purpose is interest inelastic
Answer» A. all potential investors expect the rate of interest to rise in future
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Macroeconomics, Theories and Policies 2

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