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ECA 351 Money and Banking Why does the Liquidity Trap occur? Concerning the idea of the Liquidity Trap, who is it a trap for? Why

ECA 351

Money and Banking

  1. Why does the Liquidity Trap occur?
  2. Concerning the idea of the Liquidity Trap, who is it a trap for?
  3. Why did the Classical School think that money is neutral?
  4. Why did Keynes think that money was NOT neutral?
  5. Give an example of how the left part of Keynes Quantity Theory of Money equation works.

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