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12/21/2024 3:35:04 PM (GMT+1)

What does the term "Liquidity Trap" mean?

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The term "Liquidity Trap" refers to an economic situation where central banks cannot stimulate the economy by lowering interest rates because they are already at a minimum level, and people and businesses are not willing to spend money. In such a situation, money remains "frozen" in the financial system, and inflation and economic growth do not increase. This phenomenon can lead to prolonged stagnation and problems in the economy, as traditional methods of influencing the economy lose their effectiveness.


This material was prepared by Khachatur Davtyan, developed and translated by artificial intelligence.



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