liquidity trap


liquidity trap
liquidity trap UK US noun [S] ECONOMICS
a situation in which a government is not able to encourage economic activity, for example by cutting interest rates, because people who have money do not want to spend it: »

This carries the danger of the 'liquidity trap', where real interest rates cannot be cut sufficiently to stimulate growth because prices are falling even faster.


Financial and business terms. 2012.

Look at other dictionaries:

  • Liquidity trap — A liquidity trap is a situation described in Keynesian economics in which injections of cash into an economy by a central bank fail to lower interest rates and hence to stimulate economic growth. A liquidity trap is caused when people hoard cash… …   Wikipedia

  • Liquidity Trap — A situation in which prevailing interest rates are low and savings rates are high, making monetary policy ineffective. In a liquidity trap, consumers choose to avoid bonds and keep their funds in savings because of the prevailing belief that… …   Investment dictionary

  • liquidity trap — condition in which monetary expansion does not affect the exchange rate (Economics) …   English contemporary dictionary

  • liquidity trap — A situation in which investors hold on to cash because they are worried about the likelihood of a fall in the price of financial assets. J. M. Keynes argued that in these circumstances monetary policy becomes ineffective, because monetary… …   Big dictionary of business and management

  • liquidity trap — Fin a central bank’s inability to lower interest rates once investors believe rates can go no lower …   The ultimate business dictionary

  • Liquidity — A market is liquid when it has a high level of trading activity, allowing buying and selling with minimum price disturbance. Also a market characterized by the ability to buy and sell with relative ease. The New York Times Financial Glossary * *… …   Financial and business terms

  • liquidity — A market which allows quick and efficient entry or exit at a price close to the last traded price. The ability to liquidate or establish a position quickly is due to a large number of traders willing to buy and sell. The CENTER ONLINE Futures… …   Financial and business terms

  • Trap — A trap is a device or tactic intended to harm, capture, detect, or inconvenience a human or animal intruder, or animal pest or game. Traps may be physical objects, such as cages or snares, or metaphorical concepts. Physical trapsExamples of… …   Wikipedia

  • trap — {{Roman}}I.{{/Roman}} noun 1 hidden equipment used for catching sb/sth ADJECTIVE ▪ animal, bear, mouse (usually mousetrap), etc. ▪ radar (BrE), speed ▪ …   Collocations dictionary

  • liquidity — noun Liquidity is used before these nouns: ↑crisis, ↑trap …   Collocations dictionary


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