liquidity trap Meaning in the Cambridge English Dictionary Cambridge dictionaries logo

Meaning of “liquidity trap” in the English Dictionary

"liquidity trap" in Business English

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liquidity trapnoun [S]

uk   us   ECONOMICS
a ​situation in which a ​government is not able to encourage ​economicactivity, for ​example by ​cuttinginterestrates, because ​people who have ​money do not want to ​spend it: This ​carries the danger of the '​liquidity trap', where ​realinterestrates cannot be ​cut sufficiently to ​stimulategrowth because ​prices are ​fallingeven faster.
(Definition of liquidity trap from the Cambridge Business English Dictionary © Cambridge University Press)
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