Question

The liquidity trap is a situation where any amount of expansion of money supply cannot lower interest rate any further select one:



a. True



b. False

Answer 1

it is true becoz

keynes said that,"after the rate of interest has fallen to a certain level, liquidity preference may become virtually absolute in the sense that almost everyone prefers [holding] cash [rather than] holding a debt which yields so low a rate of interest."

thanks,