39. The phrase "pushing on a string" means that during a recession:

higher exports may not reduce the trade deficit

lower taxes may not stimulate additional consumption

open market purchases may not lead to more investment

a higher value of the dollar may not lower the unemployment rate

40. When the economy is in a liquidity trap, we are most likely to observe:

monetary policy being ineffective

less use of fiat money by the government

strong growth in GDP

high interest rates

41. The short-run aggregate supply curve has a very flat slope because:

In most markets, prices change very little in the short-run

Changes in technology do not affect the supply side of the economy

Firms tend to rely on lower prices to sell surpluses in output

Costs are not a big factor when setting prices

NO EXPLANATION REQUIRED