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Definition: Liquidity trap is a situation when expansionary monetary policy ( increase in money Depression is defined as a severe and prolonged recession .

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Low interest rates alone do not define a liquidity trap. For the situation to qualify, there has to be a lack of bondholders wishing to keep their.

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In this article we will discuss about the concept of liquidity trap, explained with the help of a suitable diagram. Liquidity trap refers to a situation in which an.

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Liquidity trap refers to a state in which the nominal interest rate is close or such a situation, because the opportunity cost of holding money is zero, even if the.

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A liquidity trap is a situation, described in Keynesian economics, in which, "after the rate of A liquidity trap may be defined as a situation in which conventional monetary policies have become impotent, because nominal interest rates are at or.

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(c) The liquidity trap refers to a situation whereby the interest rate is so low that no one wants to hold bonds, and individuals only want to hold cash. This is.

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The liquidity trap refers to a situation in which a.) the nominal interest rate is practically zero b.) the inflation rate is extremely high c.) the spread in yields.

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Put simply: the term ”liquidity trap” refers to a situation in which nominal interest rates are so low that stimulating the economy through monetary.