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If you provide clear solution and explanation, I would be very grateful. Thanks in advance! a. What is a liquidity trap? Show how liquidity trap

If you provide clear solution and explanation, I would be very grateful. Thanks in advance!

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a. What is a liquidity trap? Show how liquidity trap can be depicted (i.e. graphed) using the market for money model. Label the axes, mark the curves and all relevant points and explain. 5 marks b.Discuss the effectiveness of monetary policy to get out of a liquidity trap in a recessaionary situation. Use an appropriately lebeled AE graph, show all relevant points and explain. 8 marks c. Using carefully labeled AE graphs, show and explain, how an economy can get out of a liquidity trap via scal policy. Label the axes, mark the curves and all relevant points..Explain. [Don't forget to mention what are the scal policy tools being used]. 12 marks

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