What is crowding out, and when would you expect it to occur? In the face of substantial crowding out, which will be more successful – fiscal or monetary policy? (4pts) 6. What is a liquidity trap? If the economy was stuck in one, would you advise the use of fiscal or monetary policy? (4pts) 7. Consider the central bank imposes a contractionary monetary policy under fixed exchange rates and perfect capital mobility. Show and explain in a graph. Discuss what if it was a contractionary fiscal policy? Graph it.