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What is a Liquidity Trap?

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QsId 117
Asked by Isaac Thuku
Category Personal Question
Title What is a Liquidity Trap?
 

What causes a liquidity trap?

Tags liquidity, interest rates, economy, entrepreneur, savings, debt, GDP, investment
Stats 3 Response(s)
 
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MemberAnswerDate
dotty It is a point in the economy the interest rates cannot fall further and people prefer to hold their asset in liquid form thus no saving nor investment .At this point the monetary policy is ineffective this makes the GDP to stop growing thus recession leading debt through govt borrowing2016-03-08

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