In the liquidity trap case where the LM schedule is nearly horizontal,
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1 mark, −0.33MacroeconomicsIS-LM modelMonetary policy and the liquidity trap in IS-LMModerateabout 1 min
UoH 2010 Question 11: IS-LM model
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IS-LM model has come up 137 times in 7 exams since 2004.
What this question tests
This question is on Monetary policy and the liquidity trap in IS-LM, part of IS-LM model in Macroeconomics.
How money supply changes work, and the classical and liquidity-trap extremes.
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