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Answer to Question #207404 in Macroeconomics for raju

Question #207404

what is liquidity trap ? is monetary policy ineffective in this case


1
Expert's answer
2021-06-16T13:33:38-0400

A liquidity trap is a situation in the economy when the interest rates are low and saving rates are high. In this situation, monetary policy is ineffective because it has no power to affect the interest rates.


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