Liquidity Trap

Essay specific features

 

Issue:

Business

 

Written by:

Thomas M

 

Date added:

April 9, 2012

 

Level:

University

 

Grade:

A

 

No of pages / words:

3 / 766

 

Was viewed:

9231 times

 

Rating of current essay:

 
Essay content:

This makes the recession even more severe. In normal times, the monetary authority (usually a central bank or finance ministry) can stimulate the economy by lowering interest rate targets or increasing the monetary base. Either action should increase borrowing and lending, consumption, and fixed investment...
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Either action should increase borrowing and lending, consumption, and fixed investment. When the relevant interest rate is already at or near zero, the monetary authority cannot lower it to stimulate the economy. The monetary authority can increase the overall quantity of money available to the economy, but traditional monetary policy tools do not inject new money directly into the economy...
displayed 300 characters

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