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

Term of the Day

Mortgage life insurance

A life insurance policy that pays off the remaining balance of the insured person's mortgage at death.

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