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Why is fiscal policy effective when the economy is in a liquidity trap?a)Because it reduces the money supply, leading to higher interest rates.b)Because it increases the money supply, leading to lower interest rates.c)Because it increases investment demand, even when interest rates are at zero.d)Because it decreases investment demand, even when interest rates are at zero.Correct answer is option 'C'. Can you explain this answer? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Why is fiscal policy effective when the economy is in a liquidity trap?a)Because it reduces the money supply, leading to higher interest rates.b)Because it increases the money supply, leading to lower interest rates.c)Because it increases investment demand, even when interest rates are at zero.d)Because it decreases investment demand, even when interest rates are at zero.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Why is fiscal policy effective when the economy is in a liquidity trap?a)Because it reduces the money supply, leading to higher interest rates.b)Because it increases the money supply, leading to lower interest rates.c)Because it increases investment demand, even when interest rates are at zero.d)Because it decreases investment demand, even when interest rates are at zero.Correct answer is option 'C'. Can you explain this answer?.

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