Suppose that, in a liquidity trap, bank re-serves are less liquid than government debt. If the central
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Suppose that, in a liquidity trap, bank re-serves are less liquid than government debt. If the central bank conducts an open market purchase of government debt, what will be the effect on the price level? Use a diagram, explain your results, and discuss.
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In a liquidity trap if the bank reserves are less liquid tha...View the full answer
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