Liquidity Trap

Definition:

A situation where monetary policy can no longer stimulate the economy. When an economy enters liquidity trap, increases in money supply fail to lower interest rates and fail to stimulate the economy.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

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Used in the context of general equities. Hierarchy of choices concerning price and volume of bids or offers proposed to a customer (e.g. Menu of offerings to a customer buyer - a) 10m @ 24 1/4; b)... Read More

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