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Explore the impact of expansionary policies on inflation and investment, including the concepts of "crowding out" and "liquidity trap." Understand how government deficit spending affects these economic factors.
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CMT and KT compared Effects of expansionary policies 1inflation is a general increase of prices 2“crowding out” describes the idea that increases of government deficit spending result in lower Investment 3 A “liquidity trap” describes a casewhere banks would rather hold money than lend it.