The central bank decides to push long run inflation to zero

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Reference no: EM131221759

How does each of the following events affect the risk of a liquidity trap?

a. The central bank decides to push long-run inflation to zero.

b. The neutral real interest rate rises (see Section 12.5 for a review of the neutral rate).

c. The government introduces a tax on people's holdings of currency. Other assets are not taxed.

Reference no: EM131221759

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