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In the liquidity trap a small change in interest rates produces ________ change in the quantity of money demanded. A) a small B) no C) a proportionate D) a very large

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Answer: D. A very large

Step-by-step explanation:

Liquidity trap is when an expansionary monetary policy that is a situation when there's an increase in money supply does not stimulate the economic growth.

Due to this, the public prefers to hold on to the money that they've. Therefore, in the liquidity trap a small change in interest rates produces a very large change in the quantity of money demanded.

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