Note AcademyNote Academy
Start

Economics (AS & A Level) · May / June 2026 · Paper 32 · Question 19

9708Money and banking

Pessimistic consumers and entrepreneurs hoard cash rather than spend or invest even when the rate of interest has become very low. What does this describe?

  1. Areserve ratio
  2. Bthe liquidity trap
  3. Cthe marginal propensity to save
  4. Dthe quantity theory of money

As printed in the paper

Show the answer

Correct answer: B. the liquidity trap

Sit this whole paper →More on Money and banking

Make a free account to save your answers and see your weak topics and ask the AI why a wrong answer is wrong.