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2 May, 08:02

A liquidity trap occurs when expansionary monetary policy fails to work because an increase

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  1. 2 May, 08:29
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    A liquidity trap is a condition in which inoculations of cash into the reserved banking system by a chief bank fail to cut interest rates and henceforth make monetary policy unsuccessful. This occurs when expansionary monetary policy flops to work since an increase in bank reserves by Fed does not go to an increase in bank lending.
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