A Liquidity Trap is an economic situation when expansionary monetary policy does not increase the interest rate, income that is characterised by a persistent inability to stimulate economic growth and interest rates through conventional monetary policy measures. The Liquidity Trap is an adverse economic situation that can occur when consumers and investors hoard cash rather than spending or investing it even when interest rates are low, stymying efforts by economic policymakers to stimulate economic growth.
Related Definitions in the Project: The Commercial Definitions
