Liquidity Trap and Insensitive Investment Function

Liquidity Trap and Insensitive Investment FunctionThe Keynesian Transmission mechanism will eliminate a recessionary gap if there are not Liquidity Trap or Insensitive Investment function. Explain:a) What it is a liquidity trapb) What it is insensitive investment functionAggregate DemandConsidering the formula for Aggregate Demand (Also known as the product market) answer the following question:Name two macroeconomic variables that decline when the economy goes into recession, and explain why this happens?Name one macroeconomic variable that rises during a recession, and explain why this happens?Demand and SupplyPopeye’s income declines, and as a result, he buys more spinach. Is spinach an inferior or a normal good? What happens to Popeye’s demand curve for spinach?

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