Svensson proposed a "foolproof" way of dealing with this issue, which is also addressed by Gesell's
 carry tax. Pigou argued that a low wage rate and the real balance effect c
Svensson proposed a "foolproof" way of dealing with this issue, which is also addressed by Gesell's
 carry tax. Pigou argued that a low wage rate and the real balance effect could counteract this situation. This
 situation is represented as an intersection of the IS curve with a flat LM curve. Money and bonds are
 essentially substitutes when this situation occurs. Traditionally defined as a situation in which the demand
 for money is infinitely elastic, it occurred in Japan in the 1990s when interest rates dropped almost to zero.
 For 10 points, name these situations where monetary policies do little to change demand and growth.
Svensson proposed a "foolproof" way of dealing with this issue, which is also addressed by Gesell's
 carry tax.
{liquidity trap}