Consider a large negative demand shock that hits two small economies. The economies are identical except that one is closed and the other is open. Answer the following:

(a) Briefly explain how a large negative demand shock can lead to a deflation trap.

(b) Which of the economies is more likely to fall into a deflation trap following the shock? Justify your answer.

(c) What initial conditions would make it likely that both economies would fall into a deflation trap?