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Suppose the economy is in a liquidity trap. True or false. A monetary contraction will not have any effect on the nominal interest rate, though a monetary expansion may have an effect on the nominal interest
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Suppose the economy is in a liquidity trap. True or false. A monetary contraction will not have any effect on the nominal interest rate, though a monetary expansion may have an effect on the nominal interest rate.

User Matz
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3 votes

Answer:

False

Step-by-step explanation:

When a country is in a liquidity trap , monetary policy both contractionary and expansionary would have an effect on interest rate

User Andrea Carron
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